[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN SPAIN] 113
which, like any judicial procedure, require certain formalities and, above all, much longer deadlines, with the disadvantages that this entails for a company in difficulties. Likewise, the configuration of restructuring plans through the conformation of classes of credits based on broad and flexible classification criteria, although always based on objective and justified criteria, allows companies room for maneuver to configure these classes of credits in such a way that they can manage to approve restructuring plans and carry forward dissenting liabilities with small percentages of adhered liabilities. Thus, restructuring plans have been approved with extension of effects to all affected liabilities with adhesion percentages of less than 10% of total liabilities. Although during these three years of the law’s application, few restructuring plans have failed at the first-instance level, it has been the higher courts that have corrected certain abuses, such as the artificial configuration of classes by the debtor the case law has confirmed the criteria applied by the commercial courts, since there is not much room for interpretation of the wording of the rule and it is quite clear that the intended purpose of saving companies with high indebtedness, but which are economically viable and profitable, is being achieved. 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
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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