What is suspension of payments?

Suspension of payments is a judicial process whereby a declares that in those moments he is unable to respond to his debts. Thus, the definition of suspension of payments suggests that the company does have assets but that it has run out of certain solvency in terms of liquidity or cash.

Therefore, the characteristics of the suspension of payments show that the company does not have the guarantee of responding to the obligations contracted with the creditors. In this way, in the suspension of payments of a company, new periods of time will have to be assessed so that the company can respond to its creditors.

That is worth noting the differences between suspension of payments and bankruptcyIn the event of suspension, the assets are owned, although they do not end up being sufficiently liquid. In the case of bankruptcy, the company cannot directly assume its debts because they are much higher than the resources it has available.

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