BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN SPAIN] 101
the effects of the insolvency proceeding and the dismissal of the Receiver, which will only be authorized to continue with the processing of any incidents that may be pending and to process the section on the qualification of the insolvency proceeding, which we will refer to later. II.2.3. Liquidation Phase: Although the objective of this phase is to achieve the liquidation of the debtor's assets with the greatest possible degree of satisfaction for creditors, the truth is that the trend in recent years has been to sacrifice this objective in favour of any operation that allows the business activity and employment to be maintained, which is achieved through the creation of viable production units within the insolvent company. The opening of the Liquidation Phase may be initiated at the same time as the insolvency proceedings are declared, if the debtor so requests in its claim, and it is then processed simultaneously with the Common Phase, or subsequently when an agreement is not approved or the approved agreement is not complied with. In addition, the debtor may request liquidation at any time, and the Receiver may also do so in the event of total or partial cessation of the company´s activity. The opening of the Liquidation Phase will entail the dismissal of the company directors, who will be replaced by the Receiver. Liquidation operations shall be subject to the general rules
established by the TRLC, unless the Judge in the insolvency proceeding may establish special rules after hearing the Receiver, The general rules of liquidation give priority to the sale of all establishments and production units as a whole and through electronic auction. In addition, every three months the Receiver must submit a report on the state of the liquidation. Once the liquidation has been completed, the Receiver must submit a final report with the result of the liquidation and a rendering account of its actuations, together with a request for the termination of the insolvency proceeding. If the rendering accounts of the Receiver are approved, the judge will issue an order terminating the insolvency proceedings. II.3 Pre-bankruptcy law. The Restructuring Plan. The way that the TRLC contemplates to save the insolvency without the need to file for insolvency lawsuit consists of reaching and approving a Debt Restructuring Plan. This may or may not be preceded by a communication to the Court of the commencement of negotiations with the creditors. From the moment this communication is made, which may be reserved, two effects will take place: - The period of three months to try to reach the restructuring plan will begin;
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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