We are all liable to go through an economic crisis, where for various reasons we cannot meet our debts. This situation can affect natural persons, professionals and legal persons, although its effects are also felt by the creditors awaiting payment.
Insolvency proceedings seek to satisfy the creditors and ensure the survival of the company. If you need to claim debts in Santander outside insolvency proceedings, we can also advise you. And if you are an individual or self-employed worker in a situation of insolvency, the Second Chance Act may allow you to cancel your debts and start afresh.
For these reasons, a procedure has been created so that the debtor can meet the payment of their creditors through a single procedure, known as insolvency proceedings (concurso de acreedores). In any case, if this is your situation, do not hesitate to contact BBMabogados to obtain the best advice in Santander.
What are insolvency proceedings?
When a natural person, professional or legal person is in a situation of insolvency, that is, cannot meet the payments arising from their obligations or debts, the procedure known as Insolvency Proceedings must be initiated.
Through this mechanism, led by a judge, the aim is to meet the debts in an orderly manner.
Now then, insolvency proceedings have mainly two purposes. The first is business continuity; and the second, to satisfy fairly the various debts existing in the debtor’s estate.
Types of insolvency proceedings
It is important to note that there are two types of insolvency proceedings depending on how the process is initiated. Thus we have the voluntary and the mandatory or forced.
VOLUNTARY INSOLVENCY PROCEEDINGS
These are initiated by the debtor themselves, once they realise the existence of a situation of insolvency. In this way, the debtor protects themselves from possible legal actions by their creditors.
Once the application is admitted, the judge will appoint an Insolvency Administrator. This is with the aim of supervising the debtor’s acts, in addition to other powers we will look at later.
MANDATORY OR FORCED INSOLVENCY PROCEEDINGS
These may be sought by a creditor who has not obtained their debt in the six months prior to filing the application after its due date. Likewise, the shareholders may seek this insolvency.
On this particular matter, it is important to note that the application must substantiate the ruinous situation of the company and the status of creditor whose debt has not been satisfied by the debtor.
If there is no opposition from the debtor, it will be processed in the same way as voluntary insolvency.
Stages of insolvency proceedings in Santander
It is necessary to understand how this process unfolds, in which it is essential to have the advice of specialist lawyers. That said, three stages can be distinguished, namely:
COMMON STAGE
Regardless of the type of insolvency, in this stage a report is produced by the insolvency administrator which, among other things, contains a list of the debtor’s assets and rights, as well as of the amount and ranking of the debts owed to each creditor.
If the creditors raise any disagreement with this list, the so-called insolvency incidental proceedings are initiated.
ARRANGEMENT STAGE
At this point, an arrangement with the creditors will be proposed. As its name indicates, it is an agreement between the debtor and the creditors, in order to be able to meet the payments.
If the arrangement is not reached, the process will enter the liquidation stage, in which the estate is converted into money to be distributed among the creditors.
LIQUIDATION STAGE
In this stage, the insolvency administrators, starting from the inventory of the pool of assets, will seek to convert them into money in order to then proceed to pay the creditors.
The start of this stage may take place at the request of the insolvent party, at any time during the procedure.
Meanwhile, it will be an obligation for the debtor to request its opening when, with the arrangement in force, they realise the impossibility of meeting the payments and obligations undertaken after its approval.
In the same vein, liquidation may be initiated of the court’s own motion when no arrangement proposal is submitted or approved, or by a final court declaration of the nullity of the arrangement or of its breach.
LIQUIDATION PLAN
The insolvency administration must submit a liquidation plan to the judge**,** setting out the proposal for realising the assets and rights that make up the pool of assets in the insolvency.
The insolvent party or the creditors may object to it. In that case, the judge may approve the plan as initially submitted, amend it or order liquidation in accordance with the supplementary statutory rules. An appeal may be lodged against this order.
Finally, payment will be made to the creditors in accordance with the ranking of the debts regulated by the Act.
CLASSIFICATION STAGE
This is rather a consequence of the opening of the liquidation stage. The classification in insolvency proceedings seeks to clarify whether the insolvent party’s insolvency was accidental or culpable (intentional) and the effects of this for the insolvent party, their representatives and accomplices, where applicable.
How long does it take to resolve insolvency proceedings?
Predicting this is very complicated, as it depends on many factors, such as the complexity of the insolvency, the capacity of the courts, etc. An average of six months per stage of the proceedings may be estimated, although this is by no means definitive.
Your insolvency lawyer in Santander
The insolvency proceedings of companies and self-employed workers in Cantabria are processed before the Commercial Court of Santander, whose workings we know well after decades of practising in the city. Acting in time is key: the sooner the insolvency is analysed, the more options there are to protect the continuity of the business.
That is why, before taking any step, we carry out a viability study with no obligation: we review your financial situation, the list of debts and creditors and assess whether insolvency proceedings, an arrangement with the creditors or, if you are an individual or self-employed worker, the Second Chance Act suits you best. Tell us about your case and we will tell you clearly what your best option is.
LAWYERS WHO EMPATHISE WITH THEIR CLIENTS IN DIFFICULT MOMENTS
We protect our clients’ rights with the utmost dedication and diligence, placing special emphasis on personal attention.
