After the quarantine began in March 2020, many companies and individuals were affected differently, which provoked some proposals for changes in the Bankruptcy Law. If approved, this law can be changed to suspend debt collection for 30 days, and create a preventive negotiation system to provide further protection and prevent many companies from closing their doors.
Emergency Measures
This measure, of an emergency nature, is justified by the COVID-19 pandemic and is provided for in PL 1.397/2020, already approved by the chamber and still under consideration in the Senate. The proposal also suspends 30 days of the judicial and extrajudicial execution of guarantees or obligations due after March 2020.
The collection of interest on arrears is also suspended, both those required in contracts and those arising from taxes’ non-payment. Understandably, a trade that stayed 30 or 60 days with the doors closed has no cash entry or profit to fulfill its financial charges. At the same time, it needs to comply with expenses such as payrolls, taxes, suppliers. This rule applies to the individual businessman, private legal entity, rural producer, and self-employed professional. If there is no agreement, the discussion must continue in the judiciary, in the procedure under court specialized in bankruptcy.
Restructure
The debtor that proves losses of 30% (compared to the income of the previous quarter) can make a preventive negotiation, which suspends for another 90 days the collections of the overdue debts. The participation of creditors in the negotiation sessions is optional. During this preventive negotiation, the debtor can make new financing to restructure his business, and these amounts do count as other outstanding debts.
If you would like to eliminate your debt, contact a Hidalgo County bankruptcy attorney to find out how to get financial relief.