Of the many businesses that open, only a few survive. The situation is even more difficult for small businesses. Those businesses that fail often leave behind many creditors.
Between creditor groups[1] There are differences and conflicts of interest, for example, between employees, customers, suppliers, authorities, and more.
For the sake of illustration, we will only describe the customer who purchased goods and paid the full price for them, versus the supplier who is supposed to supply goods through the business and does not receive the payment for the goods. This is how, for example, employees usually deal with other creditors, since they can receive their money (at least in part) from the National Insurance Institute, while the other creditors understand that the collapse of the business, in all likelihood, means non-payment of the debt.
The large, powerful entities, which usually receive legal advice, know in most cases how to protect themselves, both within the framework of the priority granted by law, and by taking preliminary legal proceedings, for example by registering a lien, or obtaining some kind of security or perhaps even a personal guarantee from the owners of the business that later collapsed. This is how banks, for example, or other large suppliers operate.
State authorities also know how to protect themselves, for example through legislation.
Those who cannot usually defend themselves are the "small creditors," who, both because of the nature of their work and their general "lack of power" vis-à-vis the business, find themselves when the business collapses and leaves behind debts - with debts that are unlikely to be repaid.
Even if the debts are not too large, for a small business that is based on a small turnover - even a loss of a few thousand shekels may throw it out of balance.
It often happens that one business that collapses causes the collapse of other businesses after it (the most prominent example is the collapse of the Clubmarket chain).
So what will a "small" creditor do?
prevention
As with the "flu" - prevention is the best cure. A supplier, or business owner, should avoid providing long-term credit for very large amounts to another business. You saw that the business you sold to on installments is not meeting its payments, check its condition carefully, perhaps it is facing collapse, reduce the expected damage and potential damage. Our business owners often make mistakes when they "flow" more goods so that the business can continue to operate and in fact caused the debt to increase towards them.
Minimizing damage
If the business has already collapsed or is facing collapse, you, the creditor, have several options – first, collect the goods that you gave to the business. The prevailing legal rule is that ownership of the goods belongs to the supplier until all payments for them have been made.
Another option, somewhat limited, is set-off. When there are mutual debts between two parties, and even if one of them falls into insolvency proceedings, then each party may offset the debt that has not been repaid from what it owes the other party.
Filing a debt claim
If it is not possible to act in one of these ways to minimize the damages and you have already found yourself in a situation where you are owed money and you have no collateral or anyone to repay, you must file a debt claim (also known as proof of debt).
Many times, creditors initiate and invest in legal proceedings against a party that owes them money, and at the end, they discover that "there is no one to collect from," as the business has closed or collapsed, or the debtor is in insolvency proceedings.
In order to eliminate these legal proceedings, the law stipulates that anyone who claims to be owed money can file a "debt claim," which has almost the same status as a regular claim in court.
The debt claim is submitted to the official receiver or the official appointed by the court, and all evidence supporting the debt claim must be attached to it. The official has a "quasi-judicial" status and examines the debt claim and determines whether a debt exists and its amount, and his decision can be appealed to the court.
A debt claim must be submitted on a form that can be found on the Internet and, as mentioned, must be accompanied by all the evidence. Pay attention – The right to file a debt claim is limited in time!!! After this date, the office holder's permission is required to accept the debt claim that was filed late.
Within the framework of his powers, the person in charge must collect all of the debtor's assets, sell them, and distribute the funds received (at least part of the debt) to creditors. This way, as mentioned, it is possible to receive at least some of the money.
Lawyer Yuval Yishai fromoffice Wolfson Weinstein & Co.', deals withCommercial law AndCorporate Law, Dissolution and rehabilitation of companies.
[1] A creditor is someone who is entitled to claim a sum of money from the debtor, for any reason.
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