The Bankruptcy procedure is intended to realize the assets of an insolvent company in an orderly manner and then deal with the proceeds in accordance with the procedural rules. Only a person authorized to dispose of the insolvency estate under the opened proceedings and court orders may sell the assets. Depending on the permitted method of sale, this may be an auction, a private sale, or another prescribed procedure. Required approvals, purchase offers, selection decisions, and contract terms must be documented in a clear and verifiable manner. Before the sale, a valuation is required that is appropriate to the valuation date, the condition of the assets, and the planned method of sale. Book value, market value, and expected realization price are different measures and must not be treated as equivalent. Instead of selling individual assets separately, a sale of the company as an economic unit may be considered. For this, the assets and rights belonging to the business, the contracts to be transferred, and any required consents must be clearly identified. Whether an individual-asset sale or a sale as a whole is more economically advantageous depends on expected proceeds, costs, risks, and whether the business can actually continue operating. The realization file should fully document the valuation, sale decision, approvals, bids, purchase agreement, receipt of payment, and handover.
Realization of an Insolvent Company’s Assets in Bankruptcy Proceedings
In insolvency proceedings under Georgia’s Bankruptcy procedure, company assets are sold through an authorized and documented sales process. The method of sale, authority to dispose of the assets, valuation, and the possibility of a sale as a going concern affect the proceeds that can be achieved.
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