The Bankruptcy Procedure In Spain-00-6453

By Author: rafalinares
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The Spanish system, inspired in the social and political ideas of the liberalism of the
Nineteenth century, is presided by the principle that insolvency procedures will have to
Serve as a means to assist the market distinguish and eliminate all those person and
Entities who have failed in their business activenesses. Our insolvency law is founded on
The belief that the market should be given tools to self-regulate and depurate. The
Priorities are accordingly:

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

Therefore, it can be said that there is little or no concern in our legislation regarding
Eliminating limitations for the insolvent debtor to resume its former business
Activenesses or to start new ones.

A clear distinction can ...
... be made, however, between 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 activenesses by the supervising auditors appointed by the judge, so that
Every dealing involving payment of debts, collection of credits or the undertaking
Of obligations will have to be approved by said supervising auditors. The above mentioned
Nevertheless, the debtor maintains its legal right to manage and conduct the
Business (except when the insolvency is subsequently classified as a terminal one,
Then the judge can impose limitations on the debtor's management faculties).

On the other hand, in bankruptcy procedures, the declaration of bankruptcy entails, as
An auto consequence, the prohibition of the debtor to administer its summations. The
Management faculties of the debtor are assumed by the receivers that will be
Appointed between the creditors5. The debtor can not be subsequently rehabilitated
Until the termination of the proceedings (provided that sure 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 between 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 process for cases of terminal insolvency. Debtors undertake to
Benefit from the unclear legal limits between the objective definition of suspension of
Payments and bankruptcy cases. Therefore, a great deal of of the petitions for suspension of
Payments correspond genuinely to cases of terminal insolvency.

As stated by the rules governing the suspension of payments process, when the
Judge declares (based on the report of the supervising auditors) that the debtor's
Insolvency will have to be considered as a terminal one, a great deal of of the legal provisions
Governing bankruptcy cases become relevant to the suspension of payments
(possibleness of taking nullifying activenesses versus sure transactions prior to the
Petition for suspension of payments; examination of the debtor's liability for the
Terminal insolvency; possibleness of imposing further and added limitations on the debtor's
Managing faculties). Nevertheless, 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