Description Of The Spanish Bankruptcy Procedure-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 must
Serve as a means to aid the market discern and eliminate all those person and
Entities who have failed in their business activities. Our insolvency law is founded on
The belief that the market should be given tools to self-regulate and depurate. The
Priorities are therefore:

I) the shelter 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 preferences).

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

A clear distinction can be made, nevertheless, ...
... 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
Every transaction involving payment of debts, collection of credits or the undertaking
Of indebtednesses must be approved by said supervising auditors. The above mentioned
However, 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 can impose limitations on the debtor's management faculties).

Then again, in bankruptcy procedures, the declaration of bankruptcy entails, as
An automatic consequence, the prohibition of the debtor to administer its assets. The
Management faculties of the debtor are assumed by the receivers that will be
Appointed amidst 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 applicable in the bankruptcy of companies7).

This difference amidst the personal aftermaths 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 try to
Gain from the unclear legal limits amidst the goal to be attained definition of suspension of
Payments and bankruptcy cases. Thus, many of the petitions for suspension of
Payments correspond really to cases of terminal insolvency.

According to 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 must be regarded as a terminal one, many of the legal provisions
Governing bankruptcy cases become applicable to the suspension of payments
(possibleness of taking nullifying activities versus sure transactions 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). However, 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