The status of companies

The company is active.

The branch of the company is active.

The term “default” should be distinguished from the terms “insolvency” and “bankruptcy”. “Default” essentially means a debtor has not paid a debt. “Insolvency” is a legal term meaning that a debtor is unable to pay his debts. “Bankruptcy” is a legal finding that imposes court supervision over the financial affairs of those who are insolvent or in default.

The company is still registered but has no significant activity (and no significant accounting transactions during the accounting period). Companies may be dormant for various reasons, for example, to protect a company name, in readiness for a future project, or to hold an asset or intellectual property. A company can remain dormant for as long as necessary – indefinitely if, for example, its purpose is just to prevent the name being used by another company. However, there are expenses associated with keeping a company on the register.

Here the company is declared insolvent. The company remains active, though is in administration or receivership or under a scheme of arrangement (US – Chapter 11). During this period, the company is usually placed under the protection of a law and continues operating and repaying creditors and tries to reorganize and return to normal operating. At the end, the company will either return to normal operating (the default of payment was thus temporary); or will be reorganized (parts of its activity can be restructured or sold); or will be liquidated.

The company remains active; it is not involved in insolvency proceedings but is in a period of protection. One of the conditions is that the company hasn’t been incurred into default of payment (this means that there aren’t credits unpaid). This proceeding starts on the initiative of the debtor to benefit from a suspension of creditor lawsuits. Here the terms of loans are reviewed through a negotiation with creditors. Normally there is an external supervisor. The target is to prevent financial difficulties which endanger survival of the company. A specific case for this status is for instance “Procédure de sauvegarde” in France.

We make a distinction between plain active and active but being reorganized, restructured, in process of merger … (a priori the reason for reorganization is not having financial problems).

Bankruptcy is a legally declared inability of a company to pays its creditors. The company is in the process of bankruptcy. The assets are being sold to repay the creditors. At the end the company will be dissolved and will no longer exist.

The company no longer exists as a legal entity, but the reason for this is not specified. This means that the company is dead, has no more activity or is no longer included in the companies register. Synonyms: erased, deleted, removed from register, dead, defunct, struck off, signed out, ceased, wound up. When the cause of dissolution is known, we use one of the 4 more precise labels listed below.

The company has been dissolved at the end of a bankruptcy process or there was a bankruptcy declared into an insolvency or liquidation proceeding.

The company no longer exists as a legal entity; the reason for this is a demerger: the company has been “split”.

The company has been dissolved after (friendly) liquidation of its assets.

The company no longer exists as a legal entity because it has been included in a merger or has been the subject of an acquisition.

The company is in the process of liquidation; all assets of the company are being sold. The next step is that the company will be dissolved and will no longer exist. We reserve the term “in liquidation” mainly to friendly or voluntary liquidation. The reason for the liquidation can be the termination of the company as per the company status, voluntary dissolution, or another reason that is not linked to payment/credit difficulties. In some cases, however the need for liquidation proceedings can be viewed as self-addressing creditor problems (when an insolvent debtor’s assets are insufficient to meet the claims of all creditors it will be in a creditor’s own best interest to take action to recover its claim before other creditors can take similar action).

The branch is no longer active.

The company is no longer active and the precise reason for inactivity is unknown.

No information regarding the status.

There is no information regarding the status of the branch.