The Spanish Bankruptcy Procedure-00-6453

By Author: rafalinares
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The Spanish strategy, inspired in the social and political ideas of the liberalism of the
Nineteenth century, is presided by the principle that insolvency procedures ought to
Serve as a manner to help the market discern and eliminate all those individual and
Entities who have failed in their business actions. Our insolvency law is founded on
The belief that the market had better be given tools to self-regulate and depurate. The
Priorities are consequently:

I) the shelter of the safety of business transactions,
Ii) the preservation of the debtor's estate, as a manner to enable creditors to recover their receivable to the greatest extent possible, and (iii) to ascertain that all creditors are given equal treatment - pursuant to the rule known as par conditio creditorum (with the exception of the legal privileges and predilections).

Thus, it may be said that there's small or no concern in our legislation when it comes to
Eliminating restrictions for the insolvent debtor to resume its former business
Activenesses or to begin new ones.

A clear distinction may be ...
... made, however, among the suspension of payments
(temporary insolvency, in principle) and bankruptcy (terminal insolvency, in
Principle).

In suspension of payments procedures, the debtor is only subject to the approval and
Control of its actions by the supervising auditors appointed by the judge, so that
Each transaction involving payment of debts, collection of credits or the undertaking
Of obligations ought to be approved by said supervising auditors. The above mentioned
Nonetheless, the debtor maintains its legal right to manage and behavior the
Business (except when the insolvency is subsequently classified as a terminal one,
Then the judge may impose restrictions on the debtor's management faculties).

On the other hand, in bankruptcy procedures, the declaration of bankruptcy entails, as
An automatic consequence, the prohibition of the debtor to administer its sum totals. The
Management faculties of the debtor are assumed by the receivers that are going to be
Appointed among the creditors5. The debtor may not be subsequently rehabilitated
Until the termination of the proceedings (provided that certain circumstances are
Met), unless a composition with the creditors especially allows him/her to resume
Business (this would only be relevant in the bankruptcy of companies7).

This divergence among the personal consequences suffered by the debtor in
Suspension of payments and bankruptcy procedures results in exercise in an overuse of
The suspension of payments procedure for cases of terminal insolvency. Debtors undertake to
Gain from the unclear legal limits among the objective definition of suspension of
Payments and bankruptcy cases. Thus, galore of the petitions for suspension of
Payments correspond genuinely to cases of terminal insolvency.

According to the rules governing the suspension of payments procedure, when the
Judge declares (grounded on the report of the supervising auditors) that the debtor's
Insolvency ought to be looked at as a terminal one, galore of the legal provisions
Governing bankruptcy cases become relevant to the suspension of payments
(possibility of taking nullifying actions versus certain transactions prior to the
Petition for suspension of payments; examination of the debtor's liability for the
Terminal insolvency; possibility of imposing further and added restrictions on the debtor's
Managing faculties). Nonetheless, even in situations of terminal insolvency, the debtor in
Suspension of payments will not be disqualified for conducting business.

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http://www.articulo.org/articulo/16591/agilizar_el_concurso_de_acreedores_una_necesidad_imperiosa.html // http://www.articuloz.com/economia-articulos/el-vicepresidente-del-cgpj-pide-la-resolucion-del-concurso-de-acreedores-en-un-mes-2408211.html