BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN SPAIN] 103
II.4. The qualification section. The purpose of the qualification section is to determine whether the insolvency situation was generated or aggravated by the willful or culpable conduct of its directors, ghost directors or general directors The qualification phase will be opened at the end of the common phase. For an insolvency to be classified as guilty, the Spanish Insolvency Law (LC) requires that there has been an aggravation of the willful and / or culpable insolvency of the Debtor, establishing two types of factual assumptions: (i) assumptions that, if concur, determine guilt of the bankruptcy without the need to prove that insolvency was caused or aggravated as a result (called “iure et de iure” assumption) where no proof to the contrary is admissible); (ii) and assumptions that, although they concur, must cause or aggravate the insolvency (“iuris tantum” assumption) and where contrary evidence is permissible. Likewise, the consequences that for the affected persons may derive from the characterization of the contest as guilty are several, from the disqualification to manage assets and rights, to the liability to cover the deficit of assets not satisfied in the insolvency proceeding. III. INSOLVENCY PROCEEDING OF NATURAL PERSONS Although there is nothing to prevent natural persons from using the insolvency proceeding referred to in the previous sections, with the necessary differences derived from their status as natural persons (documentation to be provided, shorter processing time, etc.), the fact is that the
only reason for individuals to initiate it is that through it they can get their debts discharged. This is the so-called "Benefit of Exoneration of Unsatisfied Liabilities" ("BEPI"), which is the essential differentiating element in the regulation of the insolvency of natural persons with respect to legal persons, since the latter will not have the option of obtaining such exoneration insofar as, as legal persons, they only are able to approve an agreement and thus continue with their activity, or they are liquidated and extinguished. Having established the above, in order for a natural person to achieve BEPI the following is required a. By means of a debt payment plan. This means of exoneration does not require the prior liquidation of the debtor's assets or; b. When after the liquidation of the debtor's assets there is a continuing insufficiency of assets to satisfy the debts. In both cases, in order to obtain the BEPI, a series of subjective requirements are established for the personal debtor that focus on his consideration as a debtor in good faith, i.e., not having been declared bankrupt, not having been convicted of crimes against assets, public finances, or against workers in the previous ten years; In any case, certain credits are not exonerable, among others, those of public law with a limit of up to 10,000€, the credits for alimony, or the expenses and costs for the processing of the bankruptcy.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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