Arrangement with creditors or Bankruptcy | COVID-19
The coronavirus crisis is triggering an economic slowdown with unforeseeable consequences in Spain. The new context of recession that has resulted from the pandemic is pressing to take measures to mitigate the losses derived from the state of alarm and the fall in activity.
From Lusa Legal we offer you competent and constructive legal advice to face this new challenge, which firstly involves ensuring the survival of the company and the work continuity of its staff, through the mechanisms offered by the law, especially, the insolvency proceedings or bankruptcy.
We are experts who are aware of the wide casuistry that is generated in the insolvency, pre-bankruptcy, negotiation with creditors, take-off and waiting, defense of viability and, where appropriate, orderly liquidation. Likewise, we consider that the economic difficulties of the clients who request our advice should not be an obstacle to start a bankruptcy procedure, for this reason we offer rates and / or payment mechanisms adapted to the real situation of the company and thus give full viability to its processing.
Requirements to initiate the Bankruptcy Procedure in Spain
The main requirements that any entrepreneur must retain before initiating the bankruptcy process in Spain are the following:
- The voluntary nature of the call for the insolvency proceedings if requested by the debtor or necessary, when is requested by a creditor.
- The obligation to request the Arrangement with creditors or bankruptcy before the insolvency of the company with respect to the following cases:
- When sufficient assets are not available to face the execution of an embargo.
- When there are embargoes that affect the assets and property of the debtor company itself.
- When non-payments for three months of tax obligations with respect to Social Security requirements are carried forward.
- In the event that you are legally obliged to initiate an Arrangement with creditors or bankruptcy, and you are not doing it within the 2 months following the date on which you had known or should have known your insolvency status, the employer may finally respond with his own personal assets.
Procedure Phases
Common phase is the evaluation of the real situation of the company’s assets with the corresponding declaration of insolvency (Compliance requirements, precautionary measures, control of the validity of contractual relationships of the debtor, etc.), the appointment of the insolvency administrator, and the determination of the Assets-and Liabilities (all the credit challenges, their classification, asset valuation, etc. are processed in that phase).
Agreement phase, begins once the liability is determined, with the identification of all creditors and the classification of each one of them, and their agreement based on the majorities required in the next piece or section of that agreement phase, which is the approval, or not, of the agreement that the debtor has proposed.
Liquidation phase, will be carried out in the event that the agreement raised by the debtor is not approved, or if being approved, is not possible to apply under the established conditions. In that case, the insolvency administrator must sell the assets, to liquidate the loans pro rata as far as possible.
The experience of Lusa Legal’s experts, made up of lawyers and economists, guarantees success in all negotiations with creditors or bankruptcy proceedings initiated from our firm. We are ready to help in providing legal advice in accordance with the interests and rights of the parties involved, as well as an update of knowledge on labor regulations, agreements – both collective and individual – and ultimately, the current Bankruptcy Law. Feel free to contact us.
