Description Of The Bankruptcy Procedure 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 will have to
Serve as a means to support the market distinguish 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 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 means to enable creditors to recover their receivable to the greatest extent possible, and (iii) to assure 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 may be said that there is little or no concern in our legislation regarding
Eliminating restrictions for the insolvent debtor to resume its former business
Activities or to begin new ones.

A clear distinction may be made, nevertheless, ...
... 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 activities by the supervising auditors appointed by the judge, so that
Every transaction involving payment of debts, collection of credits or the undertaking
Of liabilities will have to be approved by said supervising auditors. The above
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 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 between the creditors5. The debtor may not be subsequently rehabilitated
Until the termination of the proceedings (provided that sure circumstances are
Met), unless a composition with the creditors exceptionally allows him/her to resume
Business (this would only be applicable in the bankruptcy of companies7).

This difference 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 procedure 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. Thus, some of the petitions for suspension of
Payments correspond actually to cases of terminal insolvency.

As stated by the rules governing the suspension of payments procedure, when the
Judge declares (based on the report of the supervising auditors) that the debtor's
Insolvency will have to be regarded as a terminal one, some of the legal provisions
Governing bankruptcy cases become applicable to the suspension of payments
(possibility of taking nullifying activities against sure dealings prior to the
Petition for suspension of payments; examination of the debtor's liability for the
Terminal insolvency; possibility of imposing additional restrictions 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