The declaration of insolvency has a number of effects, in particular on the claims of the creditors and on the legal proceedings that may be pending at the date of the declaration.
One of the effects with the greatest impact and most desired by insolvent persons, whether natural or legal, is the suspension of enforcement actions.
The declaration of insolvency determines the suspension of enforcement proceedings or measures requested by creditors that affect the assets that are part of the insolvency estate and that are in progress, and also prevents the initiation of new enforcement actions in the course of the insolvency proceedings.
In the case of natural persons, for example, this means that if the debtor has a lien on his salary, it is suspended as a result of the declaration of insolvency.
Also, the declaration of insolvency of a natural person suspends, for example, the enforceable sale of properties that are being sold within the scope of an enforcement action – the sale will take place in the insolvency process, where the debtor may have a more intervening role.
In the case of legal persons, the declaration of insolvency suspends, for example, active seizures on the company’s bank accounts.
This effect may be quite relevant in the course of the proceedings, in particular if the company intends to submit an insolvency plan.
As a general rule, enforcement actions are subsequently extinguished in the case of insolvent debtors. However, if there are other non-insolvent debtors, the enforcement will proceed against them.
Once the insolvency has been declared, all actions concerning assets included in the insolvency estate, and all actions of an exclusively patrimonial nature brought by the debtor, must be joined to the insolvency proceedings, as well as actions by persons/companies especially related to the debtor.
The declaration of insolvency determines the maturity of all the obligations of the insolvent party that are not subject to a suspensive condition, and generally has the effect of “fixing” the amount owed at the date of the declaration of insolvency.
The declaration of insolvency also suspends all limitation and prescription periods that the debtor can invoke during the course of the proceedings.
In this context, it should be noted that the limitation period for tax debts is only suspended for the main insolvent debtor, and not for the subsidiary liable – as would be the case with a company that is declared insolvent and the subsidiary liable is its managing partner.
