Description Of The Insolvency Procedures In Spain-00-6453

By Author: rafalinares
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The Spanish scheme, 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 assist the market distinguish and eliminate all those person and
Entities who have failed in their business activities. Our insolvency law is founded on
The faith that the market had better be given tools to self-regulate and depurate. The
Priorities are therefore:

I) the shelter of the safety of business dealings,
Ii) the preservation of the debtor's estate, as a manner to enable creditors to recover their receivable to the largest extent possible, and (iii) to make sure 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).

Thence, it may be said that there's small or no concern in our legislation in regards to
Eliminating limitations for the insolvent debtor to resume its former business
Activenesses or to start new ones.

A clear distinction may be made, however, ...
... amidst 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 activities by the supervising auditors appointed by the judge, so that
Each dealing involving payment of debts, collection of credits or the undertaking
Of indebtednesses ought to be approved by said supervising auditors. The above
Notwithstanding, 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 limitations on the debtor's management faculties).

Then again, 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 are going to be
Appointed amidst 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 particularly allows him/her to resume
Business (this would only be relevant in the bankruptcy of companies7).

This difference amidst the personal consequences suffered by the debtor in
Suspension of payments and bankruptcy procedures results in practice in an overuse of
The suspension of payments routine for cases of terminal insolvency. Debtors attempt to
Gain from the unclear legal limits amidst the goal to be attained definition of suspension of
Payments and bankruptcy cases. Thence, a lot of of the petitions for suspension of
Payments correspond actually to cases of terminal insolvency.

As stated by the rules governing the suspension of payments routine, when the
Judge declares (based on the report of the supervising auditors) that the debtor's
Insolvency ought to be considered as a terminal one, a lot of of the legal provisions
Governing bankruptcy cases become relevant to the suspension of payments
(possibleness of taking nullifying activities versus certain dealings prior to the
Petition for suspension of payments; examination of the debtor's liability for the
Terminal insolvency; possibleness of imposing additional limitations on the debtor's
Managing faculties). Notwithstanding, even in situations of terminal insolvency, the debtor in
Suspension of payments wouldn't 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