An accurate evaluation for financial security

Some general aspects regarding the insolvency assessment

Posted by
Marius Sabo

Like any entrepreneur, surely you also want your company to continuously prosper and not to encounter financial problems. But there are less happy situations in which entrepreneurs can no longer afford to pay their debts, which leads them to insolvency. A very important aspect, insolvency is not the equivalent of bankruptcy, since these are two distinct stages. Bankruptcy is the last stage of insolvency proceedings, in which a company arrives only if the reorganization plan fails within a period of time required by law.

The insolvency is legally regulated by law no. 85/2014 which was subsequently completed and amended by the emergency ordinance no. 88/2018.

In the insolvency proceedings, the role of the assessor and of the assessor is necessary and very important throughout the duration of the proceedings and its phases (observation, reorganisation, bankruptcy).

Insolvency assessments generally have a high degree of complexity (or higher) than other types of valuations, for several reasons:

- As a rule, all assets in the patrimony of the debtor company (real estate, movable property, intangible assets, financial assets, etc.) are valued;

- The valuation of assets can be carried out both individually and in bulk;

- Both the market value (in the event of continuation of activity) and the liquidation value are estimated (in the event of cessation of activity - both on the premise of the orderly sale and in that of the forced sale);

- The purpose and type of value must be consistent with the phase in which the debtor company finds itself.

From the above-mentioned aspects we can conclude that, although such assessments are complex and require a high degree of knowledge, collaboration with the administrator / liquidator is essential so that they are very well understood and correlated with the purpose and type of value, as well as with the reporting of the results. The collaboration with creditors should not be forgotten either, as long as they can provide us with information / documents about the assets they have under guarantee.

The impact of the evaluation results on the decisions to be taken in the procedure can be decisive. No matter how good professionals we are, without transparent communication with the parties involved in this process (even with the debtor) we will not be able to claim a high trust in the valuation report, and it can be challenged (by the administrator / liquidator or by creditors).

The assessment requested in the insolvency proceedings gives the assessor the chance to move to a new professional stage, to progress and master less frequently used techniques, and, if you like, to get rid of automatisms, given that very rarely such evaluation missions are similar.

In addition to objectivity and professionalism, which the code of ethics of the profession imposes anyway, communication and the way in which we make the results of our work understood should not be neglected, all this in order to be able to claim and obtain the respect and trust due.

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