"Insolvency threat": a negative but life-saving signal for business

Deterioration of financial performance or the emergence of negative circumstances can cause a crisis at the enterprise and the loss of the ability to fulfill monetary obligations to creditors, i.e., lead to insolvency (bankruptcy).

In most cases, before bankruptcy occurs, an enterprise may be in a state of "threat of insolvency" (threat of bankruptcy) for some time, during which it can take measures to improve its business activities and prevent fatal consequences.

Although a company being at risk of bankruptcy is a negative situation, its timely detection gives management a chance to apply anti-crisis measures.

What is the difference between a "threat" and insolvency (bankruptcy)?

From 01.01.2025, the legislator provided a clear definition of the concept of "threat of insolvency", thereby distinguishing it from the concept of "insolvency", which was not the case before 01.01.2025.

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