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 should
Serve as a way to support the market distinguish and eliminate all those individual and
Entities who have failed in their business activities. Our insolvency law is founded on
The belief that the market ought to be given tools to self-regulate and depurate. The
Priorities are consequently:

I) the protection of the safety of business transactions,
Ii) the preservation of the debtor's estate, as a way 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).

Thence, it can be said that there is small or no concern in our legislation about
Eliminating limitations for the insolvent debtor to resume its former business
Activenesses or to begin new ones.

A clear distinction can be made, nonetheless, ...
... 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 obligations should be approved by said supervising auditors. The above mentioned
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 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 assets. The
Management faculties of the debtor are assumed by the receivers that are going to 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 specially allows him/her to resume
Business (this would only be relevant in the bankruptcy of companies7).

This difference between the personal aftermaths 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 try to
Gain from the unclear legal limits between the objective definition of suspension of
Payments and bankruptcy cases. Thence, a good 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 procedure, when the
Judge declares (grounded on the report of the supervising auditors) that the debtor's
Insolvency should be looked at as a terminal one, a good deal of of the legal provisions
Governing bankruptcy cases become relevant 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). Notwithstanding, 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