How to use Bankruptcy Law to avoid bankruptcy

[googlefont font = ”Open Sans” size = ”15px” margin = ”0px 0 0px 0 ″] Do you know how to use Bankruptcy Law to avoid bankruptcy?

Here I explain how to use the Bankruptcy Law to avoid bankruptcy, as a legal "solution", so that companies and individuals can resolve this type of situation.

It is a declaration of insolvency that allows you to paralyze liens and the non-payment of your debts . [/ Googlefont]

Bankruptcy Law and a bankruptcy
When a company enters a bankruptcy it responds with all its assets

[googlefont font = ”Open Sans” size = ”30px” margin = ”0px 0 0px 0 ″] The consequences of joining the Bankruptcy Law [/ googlefont]

[googlefont font = ”Open Sans” size = ”15px” margin = ”0px 0 0px 0 ″]
When someone makes the difficult decision to declare insolvent, this will bring us advantages and disadvantages.

The advantages of the Bankruptcy Law:

  • You can get up to five years deferral.

  • Lawsuits for non-payments are paralyzed.

  • The debt can be negotiated with the possibility of getting up to a 50% reduction.

  • The accumulation of interest on unpaid credits is paralyzed.

  • Payment is negotiated with creditors.

  • Garnishment on property can be avoided.

  • If there were mortgage charges, taking advantage of the Bankruptcy Law would be the best way to protect our assets.

It seems that the advantages are interesting, but the reality indicates the opposite.

The disadvantages of availing themselves of a bankruptcy procedure begin with the expenses, the judicial cost of the procedure is quite high, it is a controversy that someone who cannot pay their debts has money to hire professionals and pay notaries in the processing of all the documents necessary.

But more than disadvantages, experts in jurisprudence indicate that the true failure of this Law, in most cases, when initiating a bankruptcy process, positive effects are not achieved on future business viability.

If you like the data and statistics, in 2013 of the 5,049 bankruptcy proceedings the agreement was only approved in 402 cases, a creepy 7.5% if we compare it with other European countries such as Germany with 20%.

I tell you an open secret, one of the main causes why a company has complicated its successful exit to the process, is the difficulty that a company has to obtain financing within a bankruptcy.

In a bankruptcy process, the company is left completely alone, adrift, under the watchful eye of El Gran Hermano (the bankruptcy administrator), this is in charge of guarding the process, but unfortunately if the company does not have a high capacity to generate income from their own means the future will be very black. [/ googlefont]

[googlefont font = ”Open Sans” size = ”30px” margin = ”0px 0 0px 0 ″] Phases within a bankruptcy [/ googlefont]

[googlefont font = ”Open Sans” size = ”15px” margin = ”0px 0 0px 0 ″]
Within a bankruptcy there are three phases.

1. The Previous Acts:

In a first phase are the preliminary acts, which are established until the order of admission to processing of the procedure.

  • Budgets of the declaration of insolvency.

  • Procedure for the declaration of insolvency.

2. The Common Phase:

Subsequently, a common phase is established, which ranges from when the order has been admitted until the bankruptcy report is processed.

  • The accrual of interest is paralyzed

  • Pending executions are halted

  • The property is prevented from selling off the property (a single creditor), it is the objective of the Law (no new lawsuits can be filed)

In this phase, it is published in the official gazettes, both national and of the Autonomous Community (BOE and BORM).

Likewise, it is communicated to the commercial property registries and the bankruptcy resolution registry.

It is at this moment when the Insolvency Administrator appointed by a Judge with well-defined functions enters the scene:

  • Manage certain property of others or exercise the function of assistance or surveillance in the management of said property.

  • Analyze memory

  • Verify the accounting status.

  • Creditors

  • The inventory

  • Make a report to communicate to the Judge and in turn to publish the official bulletins.

3. Resolution Phase:

And finally it is resolved in the resolution phase, which is the agreement that determines the continuity or liquidation of the owner of the contest.

Once the above term has ended between 4-5 months, the Judge within the following 15 days will issue an order ending the Common Phase, initiating the agreement and calling the creditors' meeting to be approved within a period of three months.

In the following 15 days you must present the agreement proposal.

For the agreement to be approved, they have to vote 50% of the ordinary liabilities, said agreement proposes the payment to ordinary creditors at 50% with a maximum term of five years.

If the proposal is accepted, it is submitted to the Judge for approval. In this case, a liquidation plan is prepared and communicated to the creditors, and if they agree, this agreement will be approved by the Commercial Court.

As you can see, the process is long and hard, full of documents, presentations, lawyers and others.

The only recommendation before starting the process is to be able to consult with a private investor about the possibility of financing the company in the event that there is some equity available.

When the bankruptcy procedure has already started, access to credit will be closed in 99% of cases.

If this information has been interesting to you, share.

Links of interest: [/ googlefont]

http://noticias.juridicas.com/base_datos/Privado/l22-2003.html

http://es.wikipedia.org/wiki/Concurso_de_acreedores_%28Espa%C3%B1a%29

Leave a comment

Your email address will not be published. Required fields are marked with *