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Everything you need to know about the bankruptcy

Business Law
 Everything you need to know about the bankruptcy
From the most general perspective, the bankruptcy is a tool that allows satisfying the debts contracted as a social protection mechanism and a second chance to solve insolvency. In addition, bankruptcy is a mechanism that facilitates the conditions for negotiation between creditors and the debtor submitted to bankruptcy, allowing each creditor to collect their debts on equal terms.

How long does it take to resolve a bankruptcy?

As our lawyers specializing in commercial law comment, initially it is a simple and expeditious procedure that allows reaching a resolution in less than a year. However, each procedure can take a different course, therefore, its duration can be significantly variable, in such a way that a contest could lead to the acceptance of the anticipated agreement in a few months.

Now, the bankruptcy law has provided in its article 5bis, some preliminary steps before starting the first phase of the bankruptcy procedure, for which it will have to send a communication that the negotiation is going to begin.

Once the parties have reached an agreement before the Registry or Notary Public, as the case may be, the communication will be sent to the competent court by which the insolvent person and his creditors are close to an agreement for payment. of debts through an advance proposal.

As can be seen, it is an out-of-court settlement product of mediation or it can even occur with the approval of a debt refinancing.

Forms of bankruptcy

Two types of creditors can be distinguished: voluntary and necessary. It is important to know how they differ as they limit opportunities and criminal liability can be established. So we have:

1.- The voluntary contest: arises when the employer cannot take charge of his credits, therefore, he must promote the contest within a period of two months by submitting the corresponding documentation, the following being essential:

-Inventory of assets and other rights that make up your heritage

-List of your creditors Payroll of workers Annual accounts, management reports and audits, for cases where there are accounting obligations, among others.

-With this documentation, the debtor's inability to pay must be evidenced, thus facilitating the summons of creditors to the bankruptcy. This type of bankruptcy can be a great advantage for entrepreneurs who are facing imminent insolvency, since it allows them to paralyze credit payments with guarantors and start new negotiations with financial institutions that allow a solid viability of the business in the future.

2.- The necessary or obligatory bankruptcy: the law authorizes creditors to request the bankruptcy when the debtor does not do so. To do this, they must provide documentation similar to that presented by the debtor and demonstrate their legitimacy. It is important to bear in mind that the responsibilities of the administrator may be stipulated before declaring the contest.

How do I know if a company is conducting a bankruptcy?

As we have seen, having made the previous considerations, if you have a debt or are in a negotiation, it is important to specify if the company has liquidity or if, on the contrary, it is in bankruptcy, so that in that way the Payments.

For this, you can inquire through the following options:

Check through the web search engines placing the name of the company adding the phrase "bankruptcy", there will be displayed the different results that exist on it, such as reports or financial articles, it will even be reflected in the BOE.

Review the website of the Public Procedural Registry, in your search engine you can enter the name of the company and it will surely show some information of interest.

Directly request the company to indicate if it is in bankruptcy. However, you can also request a regulatory certificate from the Treasury and Social Security in which it is evident that the company has no outstanding debts.

Contact us, and our lawyers specializing in business law will study your specific case. 

At Forcam Abogados we have offices in Barcelona, Madrid and Reus.