Cessation of Payment in the Bankruptcy System

Abstract

The concept of cessation of payment constitutes a fundamental pillar in bankruptcy law,serving as the main indicator of a debtor’s financial distress and the primary legalcriterion for initiating bankruptcy proceedings. It refers to the debtor’s inability to meetdue financial obligations in a regular and sustainable manner, revealing a state ofinsolvency that disrupts the normal flow of commercial activity. This paper examinesthe legal nature, conditions, and implications of cessation of payment within thebankruptcy system. It explores how various legal systems define and determine thiscondition, its role as a triggering factor for judicial intervention, and its relationship toinsolvency and financial failure. The study also analyzes the procedural and evidentiarychallenges associated with establishing cessation of payment and its impact on creditors,debtors, and the broader economic order. Through a comparative and analyticalapproach, the research seeks to clarify how cessation of payment functions as both alegal threshold and a safeguard balancing the interests of commercial stability andcreditor protection.