[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN SPAIN] 90
II.2.2. Agreement Phase: The purpose of this phase is to process a payment proposal to creditors. The proposal may be made either by the debtor or by all the creditors representing one fifth of the debtor's assets. The filing of the proposal may be formalized at any time from the filing of the insolvency lawsuit and up to 15 days after the presentation of its report by the Receiver. As for the content of the proposed arrangement, it must include proposals for a debt reduction, a waiting period, or both, as well as the conversion of credits into shares in the bankrupt company or the transfer of assets in payment of debts. Together with the agreement proposal, a Viability Plan must be presented, specifying the resources with which the payments will be met, which must also be reflected in a Payment Plan that will be provided with the agreement proposal. The proposed arrangement must be evaluated by the Receiver before being submitted to the creditors for approval at the relevant creditors' meeting. Depending on the content of the proposal, its approval will require the adhesion (by electronic means) of the majority of the credits or up to 65% of the ordinary credits. Once the creditors have voted in favour of the arrangement proposal, the judge will review compliance with the corresponding formalities and requirements and, if such compliance is verified, will issue a judgement of approval. The judgement approving the agreement will entail the cessation of 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.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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