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A standard process for the termination of an enterprise, accompanied by the payment of all taxes and debts, as well as salaries to the company's employees, and dividing the remaining assets among the shareholders.
The liquidation of a business, whether it is an LLC, individual entrepreneurship or other type of association, can be both voluntary and compulsory. While voluntary liquidation of companies requires a collective decision of the shareholders to terminate the business, compulsory liquidation is initiated by a court order.
When a company in the Czech Republic fails to fulfil its obligations to its employees, creditors and government institutions, declaring the company bankrupt allows the owners of the company to cease its activities, avoiding claims and lengthy proceedings, as well as writing off debts through a judicial process. For the bankruptcy procedure in the Czech Republic to be initiated, the following conditions are required:
The presence of debt to at least two creditors.
The expiration of a 30-day debt period, as a result of which the company is unable to fulfil its obligations.
Filing for bankruptcy is often the most effective way to resolve the financial and legal difficulties of the company. Moreover, this procedure, if done correctly, substantially reduces the risks and consequences for the owners of the organization.
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