Insolvency Law Reform approved the draft The reform of the Bankruptcy Act and is a step closer after approval by the Council of Ministers on Tuesday March 18, referral to the Parliament Bill to amend the Bankruptcy Act, to be submitted to the Congress of Deputies.
This reform of the Bankruptcy Act, Tenran objective, streamlining, simplification and lower costs for bankruptcy proceedings, the deepening of the alternatives to competition through preconcursales institutes and correction of some aspects of the present regulation have generated practical problems and questions of interpretation.
Special Section for bankruptcy reform, the Law Commission of the Ministry of Justice, which included seventeen legal and economic experts has drafted a proposal that has been the basis for this reform.
The project, from basic principles of the current Law, aims at standardizing the role of competition and incorporate it as a tool for the viability of enterprises and not just as a formula for settlement when they enter difficulties.
Among the highlights of the proposed reforms include:
- Development of alternatives to the competition.
- Development of accelerated or simplified.
- The insolvency administrators.
- Reforms in labor.
Alternatives to contest
The project pays particular attention to solutions preconcursales as alternative mechanisms to facilitate avoiding the need to go to the competition, and offers a solution to the insolvency of the debtor, allowing congestion in the commercial courts.
The objectives pursued are to:
a) To facilitate both proposed convention early as the completion of debt refinancing agreements between the debtor and some of its major creditors, giving them security and guarantee eventual insolvency proceedings.
b) Impulse refinancing settlement agreements would, on the basis of business continuity, maximizing the value of the common debtor's assets, increasing the chances that even the creditors involved in the agreement to meet more of their credits.
To do this, first, clarifying the unique legitimacy of the receivers to challenge refinancing agreements, and on the other, makes a new regulation on agreements of this kind may be approved in court. This allows judicial approval of the agreement to extend the effects other creditors, although they had shown against or did not participate in the agreement. To this must be of agreements to ensure continuity of business, as certified by an independent expert.
addition, creditors seeking the approval of the agreement shall be credit institutions hold at least 75 per 100 of the debt held by financial institutions. If you attend these majorities and do not pose a disproportionate sacrifice for the other creditor banks, the judge always homologated in order to facilitate the sustainability of society. With this reform lending to power companies need it now.
In line with these instruments preconcursales is introduced for the first time the regulation of so-called "new money" that creditors injected into troubled companies as part of a refinancing agreement. The new rule states that 50 100 of that new money that comes to the company through the refinancing agreement, and that means new revenue cash for it, is considered a credit against the estate (priority of collection), it which is the best guarantee for financial institutions to extend new credits to revive the company, and one element in the evaluation of grant credit.
abbreviated or simplified procedure
order to reduce time and costs of the bankruptcy process, it is expected that the judge may apply the simplified procedure if it considers that the competition is of low complexity, considering that a number are objective and without prejudice to any individual assessment in each case can be made, in other cases as when the debtor presents a proposal for agreement of transfer of the undertaking or cessation of workers without charge.
insolvency administration
is a progress in the professionalization of the receivers, both through the requirements of responsibility, and the training of them. The reform is considered management as a key part of legal assistance that can help reduce congestion of the commercial courts and to keep their holders the functions by the Constitution.
Therefore, the new law administrators have the ability to correct the mistakes of the list of creditors, reducing to a large extent, the demands of bankruptcy incidents, the main cause of delay in the proceedings.
the appointment is power any contest, whether ordinary or short, auxiliary delegates and introduces the possibility of bankruptcy administration is performed by a legal person, a figure which could be called "society of bankruptcy administration."
on labor reforms
The Bankruptcy Reform Act also aims to improve the position of workers in contests and incorporate recent changes to the labor reform approved by the Law of 17 September 2010, urgent measures to reform the labor market. Ensuring respect for the rights of workers affected by the situation of a company in crisis, adapting the Insolvency Act for the declaration of insolvency in this sense have the least impact and reiterated the fundamental principle that labor issues submitted to the bankruptcy process should take into account the principles underlying the social arm of the law.
Thus, they resolve interpretive doubts raised in order for the participation of representatives of workers, the social fund and the procedures relating to labor and resources.
Finally indicate that this future law, refine the reform introduced by Royal Decree of 27 March 2009 on urgent measures in taxation, financial and bankruptcy.
