[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN SPAIN] 88
in a "situation of insolvency", understood as the impossibility of regularly complying with its obligations. However, also the debtor may file for an insolvency proceeding not only when such default occurs at the time of filing for an insolvency proceeding (current insolvency), but also when the debtor foresees that the default will occur within the following three months (imminent insolvency). The insolvency proceeding begins with the filing of a lawsuit for insolvency before the Commercial Court of the province where the debtor has the main centre of management and administration of the company. The lawsuit may be filed by the debtor itself, in which case we will be dealing with voluntary insolvency proceedings, or by the creditors, in which case we will be dealing with necessary insolvency proceedings. The most relevant consequence between the two cases is that, as a general rule, in the case of voluntary insolvency proceedings, the administrative body will be maintained, whereas if insolvency proceedings are filed by the debtor, they will be dismissed and replaced by the Receiver. However, as we have said, this is not an imperative consequence. Certain legal and financial documents must be attached to the lawsuit, the most relevant of which are as follows: - The so-called "Legal and Economic Report" in which the debtor must justify its insolvency situation; describe the legal and economic background; identify the administrative body and partners; express the causes of the insolvency; and whether or not it considers the insolvency to be viable; - A "List of Creditors" in which the debtor shall duly identify each of its creditors,
contact details available to him and the specific debt owed and its status; - An "Inventory of assets and rights" of which it is the owner with the identification, location and value attributed to each of them. II.1.2. Declaration of the insolvency proceeding. The insolvency proceeding shall be declared by means of an order issued by the Commercial Court, which shall contain, among others, the following pronouncements: - The appointment of a Receiver to manage the proceeding: - The commencement of the "Common Phase", as well as, in the event that the debtor has requested it in the lawsuit for insolvency proceedings, the simultaneous commencement of the "Liquidation Phase" - An appeal to creditors to communicate their credits. II.1.3. Effects of the insolvency proceeding. The main effects of the declaration of the insolvency are produced by legal imperative, and are the following: - The paralysis of any judicial or extrajudicial execution against the debtor's assets, except for labor executions, public law credits and secured credits, provided that they are directed against assets or rights that are not necessary for the continuity of the debtor's activity and; - The suspension of the accrual of any kind of interest, except ordinary interest on mortgage loans and up to the amount of the guarantee
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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