Article 5 of the Insolvency Act sets out an obligation to file for the instigation of insolvency proceedings in the occurrence of insolvency (see point 3 above). This obligation, regarding Article 3, falls on the representative bodies of the company.
The obligation arises from the moment the representative bodies/directors are aware, or should be aware, of the insolvency of the company (see point 3 above).
In the event of a pre-insolvency restructuring proceeding that ends up in an insolvency proceeding, the period increases up to 6 months.
If the representatives fail to file for insolvency in time, they face several risks such as disqualification from administering other people’s property from 2 to 15 years, and the loss of any recovery right against the insolvent company or to cover the liquidation deficit. Each representative can be held personally liable for damages resulting from a late filing of an application for insolvency. Furthermore, the liability extends not only to the current representative bodies, but also to those in place during the 2 years prior to the declaration of insolvency.
There is no obligation to initiate a pre-insolvency restructuring proceeding; this falls on the representative bodies of the company.