The Effect of a Concordat Within Bankruptcy on Liquidation

Legal Article · 12 November 2026
Av. Thomas Andreas Di Constantinople

A concordat within bankruptcy allows a debtor already declared bankrupt to offer creditors a concordat while liquidation continues. It does not share the starting point of an ordinary concordat sought before bankruptcy. The bankruptcy estate and liquidation bodies already have powers over the debtor's assets.

Article 309 of the Enforcement and Bankruptcy Law regulates assessment of this proposal through the bankruptcy administration and creditors. The mechanism is more than a unilateral statement by the debtor deferring payment. Consideration of the proposal, the creditors' decision process, and court supervision take place within the statutory framework.

The financial situation within bankruptcy, existing estate assets, and expected payment at the end of liquidation matter to assessment of the proposal. The reality of the debtor's proposed resources and the result for creditors must be compared using concrete data. The existing bankruptcy decision does not make investigation of feasibility unnecessary.

The effect of submitting a proposal on realisation of assets is determined by the special statutory provision. It cannot be said that every liquidation action stops indefinitely or that the estate automatically returns to the debtor. Consequences associated with reaching confirmation and finality of the decision must be assessed separately.

For example, the debtor's statement that outside financing will be obtained is insufficient alone without evidence of its realisation. Confirmation may lead to steps connected with revocation of bankruptcy. Rejection means continuation of liquidation. The essential distinction of a concordat within bankruptcy is submission of an alternative payment outcome to statutory review within an existing collective liquidation framework.

This article has been prepared for general legal information purposes.