Judicial Management is a legal process designed to help financially distressed companies avoid liquidation by allowing them to restructure their operations under court supervision. The primary goal is to protect the interests of creditors, shareholders, and employees while giving the business a chance to recover and continue its operations sustainably. This mechanism is commonly used when a company is unable to meet its financial obligations but still has viable prospects if properly managed.

Under Judicial Management, the court appoints a judicial manager ó an independent and qualified professional ó to take over the management of the company. The managerís role is to assess the companyís financial situation, identify areas for restructuring, and propose a rehabilitation plan. During this period, all legal actions and debt recovery proceedings against the company are temporarily suspended, allowing it to stabilize without external pressure.

This system is beneficial for both businesses and creditors. For the company, it provides breathing space to reorganize operations, cut losses, and explore potential investors or mergers. For creditors, it increases the likelihood of recovering a higher portion of their dues compared to liquidation, where assets are sold at distressed prices.

From a financial market perspective, Judicial Management promotes stability by reducing sudden business collapses that can negatively affect investors and industry supply chains. It also ensures transparency and accountability since the process is conducted under judicial oversight. However, success depends on the viability of the business and the effectiveness of the restructuring plan implemented by the judicial manager.

Overall, Judicial Management serves as a crucial corporate rescue mechanism, encouraging responsible financial rehabilitation over immediate closure, thereby safeguarding economic value and preserving jobs.