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Methods To Prevent The Insolvency Of Companies

Author

Listed:
  • HORJA, Ioana Monica
  • VANCEA, Smaranda

Abstract

The insolvency of companies is a phenomenon more and more common in Romanian economy. A business is insolvent if it doesn’t have enough assets to cover its debts, or it is unable to pay its debts as and when they are due. If a company can anticipate the insolvency risk it can avoid insolvency. The aim and the objective of the paper is to highlight the main strategies and methods for preventing insolvency and also their importance for a company. The financial difficulty of a company doesn’t have a legal adequate definition, but the accounting information, the evaluation report or audit reports, the banks admonitions can offer important criterions for the appraisal of the venture and can create a reference point for the trigger action of the alertness. A hypothetical line of the companies difficulties would start from the admonitions of the difficulties, would continue with the eventual prevention procedures or measures and procedures of extra judiciary treatment of the financial crisis, and only if these procedures didn’t gave result, with the insolvency procedure. The insolvency procedure gave also a chance for a company, the reorganization procedure, but may also lead to bankruptcy. The methods for preventing insolvency can be applies also by profitable companies in order to prevent financial difficulties, and also by companies in difficulties, company which can pass the crises period applying these strategies and methods.

Suggested Citation

  • HORJA, Ioana Monica & VANCEA, Smaranda, 2012. "Methods To Prevent The Insolvency Of Companies," Academica Science Journal, Economica Series, Dimitrie Cantemir University, Faculty of Economical Science, vol. 1(1), pages 59-64, November.
  • Handle: RePEc:tig:journl:v:1:y:2012:i:1:p:59-64
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