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Bankruptcy and Insolvency

Gancayco Balasbas & Associates

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With the fast-paced and aggressive economic progress of the modern world, enterprises unable sustain their competitive edge inevitably fall. These entities experience financial turbulence, ranging from insolvency to bankruptcy. Insolvency contemplates the inability of an entity to immediately satisfy credit or pay debt due to lack of liquidity or to accumulation of negative net assets–the former situation referred to as cash-flow insolvency and the latter called as balance-sheet insolvency. A business may be cash-flow insolvent but balance-sheet solvent if it holds non-liquid assets, that cannot be immediately realized if called upon to do so. Conversely, a business can have negative net assets showing on its balance sheet but still be cash-flow solvent if ongoing revenue is able to meet debt obligations, and thus avoid default.

On the other hand, unlike insolvency, bankruptcy transpires when the entity cannot settle debts at all.

Existing laws on financial distress rest on the remodeling of the financial and organizational structure of debtors so as to permit the rehabilitation and continuation of their business. On both situations, GANCAYCO BALASBAS & ASSOCIATES assists clients undergoing through such fiscal challenges by recommending debt restructuring or other remedial measures.

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