DEMYSTIFICATION OF THE "TWILIGHT ZONE" - WHEN IS THERE A PROBABILITY OF INSOLVENCY?

Abstract

The "twilight zone" in the business of a company is a period in which its financial and business situation has deteriorated to such an extent that the onset of insolvency is likely, but there is still the possibility of recovery and continuation of business. Therefore, it is an amrorphic period between solvency and insolvency when the interests of creditors, employees and other stakeholders are particularly threatened, due to greater willingness to take risks and opportunistic behavior of persons representing society. From a comparative legal point of view, there are various instruments for protecting the interests of creditors and other stakeholders in the "twilight zone". One of those instruments is the extension of the object of special duties towards society to creditors and other stakeholders. The aforementioned approach was adopted by the Restructuring and Insolvency Directive, which foresees the obligation of member states to ensure that directors, in the period when there is a probability of insolvency, take into account the interests of creditors, members and other stakeholders. In this paper, we will try to determine the moment when insolvency is considered likely, that is, the moment when society enters the "twilight zone" and when it leaves the "twilight zone". We will argue for the application of a subjective-objective criterion, which would be based on the assumed knowledge of a person with duties towards society that the occurrence of insolvency is likely if certain objective criteria are met. In order to establish objective criteria (insolvency indicators), we will analyze the possibilities of using models for predicting insolvency and early warning systems.