THE NEW BANKRUPTCY REFORM EXPECTATIONS. THE LAW IS APPROVED REFINANCING OFFER MORE POSSIBILITIES IN THE PROCESS WORKOUTS, IT WILL BE CHEAPER BANKRUPTCY AND MORE AGILE. ARRIAGA ASSOCIATES, BANKRUPTCY DIVISION IN ZARAGOZA, SPAIN, NOW WITH LAWYERS, ECONOMISTS AND MANAGEMENT CONSULTANTS IN BANKRUPTCY.
THE NEW BANKRUPTCY REFORM EXPECTATIONS
Currently being processed in a preliminary Courts bankruptcy reform. Technically there are many reforms. But for practical purposes it could provide many advantages for companies with serious problems of liquidity.
They want to change the law because in practice the current bankruptcy law has not helped to save companies in crisis. He had asked a bankruptcy law that when a company was insolvent present or imminent, declaring bankruptcy is paralyzed executions and garnishments, debt will also stop, and be given an opportunity to approve an agreement save the company and creditors were charging slightly but most of it. That is intended to prevent the collapse of the company and every man for himself by creditors. It was thought that the cow was worth more for their milk than for meat. When it became law were times of prosperity and business crisis was not anticipated. The situation was no settlement more likely and the worst would charge all creditors equally.
But to the surprise of the meeting of creditors legislator has not served the purpose intended. Most of the contests have been made too late and the companies have gone into liquidation and no one has been well stopped. In the process of liquidation, the assets, especially in the crisis, are settled at a bargain price and hardly comes to pay the lawyers and the receivers.
In our opinion this has not been the result of that law was not well planned. As consultants and lawyers with our clients we have used the bankruptcy law to save their businesses. The bankruptcy has not served as a tool for successful refinancing. But cultural issues employers raised the issue of avoiding bankruptcy, do not think you can offer a solution and eventually come to it but wanted to avoid. They think that if they declare the contest will damage the image of the company or person and are not willing to consider. But when you fall into it because I can not help it and do it too late, the solution becomes dramatic for drama company and also for the employer.
However, the legislator wants to change the bankruptcy law for bankruptcy protection to save the company serves:
The new law places more emphasis on workouts phase. Before the petition could delay the meeting of creditors to negotiate a proposed agreement. Now to be extended a little time and also may delay the application for bankruptcy to try to reach a refinancing agreement.
Now offered incentives to banks to refinance the company. Many banks want to help companies not to enter bankruptcy since the money paid in advance and are at risk of refoulement. Prior to save the money borrowed, they had to pay more at the risk of losses. Now when a refinancing agreement with certain requirements, 50% of fresh money or refinanced term takes precedence over its bankruptcy would, with the credit account against the estate, the highest privilege.
Before refinancing agreements requiring all bank debt. Just simply approve it 75% of bank debt, it will affect 100% of bank debt.
Now the process is simplified and shortened timelines. For example will no longer need to wait for the completion of the phase of the agreement but the company does not trust him. Now you can order the liquidation when the company you want to avoid the deterioration of assets
Now the judge may declare the contest when the simplified procedure provides an easy management contest which will be enough with a single insolvency administrator.
They may have companies such as receivers and not have to be that only individuals.
To expedite the process the administrator will have more powers and no longer slow down the accumulation of both judge’s job. Though now lost more guarantees of judicial control.
Also further protect the rights of workers.
Ultimately it will approve a law that will favor more than the bankruptcy will serve to save the company. But of no use if the employer avoids thinking about bankruptcy as a solution to save his company. If you think it is a social stigma and is delayed until the end, neither this law nor the force will help in anything. With the existing law many businesses can save or improve the situation of the assets of the company and the employer.
Jes√ļs Mar√≠a Ruiz de Arriaga