Bankruptcy is an insolvency procedure applicable to debtors who are individuals. In contrast, the debtor is the one who seeks protection from creditors by entering into this process .A bankruptcy joins the insolvency proceedings that are relevant to the corporations: liquidation and recovery.
The existence of the special legal status of a bankrupt is intended to achieve two main objectives:
To allow the debtor, who truly can not pay its debts, to “start over” and to prevent the abuse of creditors and authorities in it.
To arrange the receivership of the debtor’s assets in order to distribute them in an orderly manner among the creditors in accordance with the priority order prescribed by law.
The existence of an orderly process of bankruptcy is part of modern economic life and is a clear public interest, because creditors and execution also have no interest in being abused and avenging. Instead, strive to get what you can get from the debt (bringing the repayment rate to the creditors). The company has an interest in allowing a second chance in business, if only to encourage business activity.
In Israel, the issue of bankruptcy is regulated by the Bankruptcy Ordinance. The statutory entity in the Ministry of Justice that oversees bankruptcies is the official receiver, the department of the Administrator-General. The need for a government supervisor stems from the fact that insolvency involves many parties whose mutual interest may be best represented by a neutral third party. The official receiver acts as a trustee in bankruptcy and if the court appoints a private trustee, who is usually a lawyer. When appointing a trustee, the official receiver oversees his work.
The bankruptcy proceedings are divided into four main stages:
1. Request for bankruptcy
2. Convening order
3. Declaration of bankruptcy
4. Tap the fire