{"id":1384,"date":"2011-12-27T08:00:42","date_gmt":"2011-12-27T08:00:42","guid":{"rendered":"http:\/\/www.asociacion-eurojuris.es\/en\/?p=1384"},"modified":"2020-04-11T07:20:36","modified_gmt":"2020-04-11T07:20:36","slug":"involuntary-bankruptcy-proceedings-in-spain","status":"publish","type":"post","link":"http:\/\/www.asociacion-eurojuris.es\/en\/involuntary-bankruptcy-proceedings-in-spain\/","title":{"rendered":"Involuntary bankruptcy proceedings in Spain"},"content":{"rendered":"

Unlike voluntary bankruptcy proceedings<\/strong> which are commenced by the debtor,involuntary (necessary) bankruptcy proceedings<\/strong> are those which are requested by a legitimate creditor<\/strong> in accordance with Article 3.1 of the Bankruptcy Act<\/strong>.<\/p>\n

In order for the creditor to begin the process<\/strong>, the debt must not have to been accrued in the 6 months previous to the presentation of the request and the creditor must be solely entitled to the debt.<\/p>\n

Involuntary (necessary) bankruptcy<\/strong> may also be commenced by the partners or board members of a legal entity, who are personally liable for the debts.\u00a0 (3.3 Bankruptcy Act)<\/p>\n

To initiate an involuntary (necessary) bankruptcy<\/strong> the application should be based on any of the acts lawfully prescribed by the Bankruptcy Act<\/strong> for this purpose.\u00a0 These requirements are detailed in the Exposition of Motives II, which are \u201cbased on any of the facts \u2026 which allege insolvency as prescribed in the Act\u201d.<\/em><\/p>\n

It should be pointed out that to initiate aninvoluntary (necessary) bankruptcy<\/strong> the burden of proof lies with the creditor, requiring him to include in the initial application all the evidence available to him supporting his claim.\u00a0\u00a0 He must also prove his position as a creditor and any of the facts described in Article 2.4 of the Bankruptcy Act<\/strong>, namely the failure on the part of the debtor to pay:<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Tax obligations payable during the three months previous to the application for Liquidation.<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Social security payments and other contributions during the same period<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Wages, allowances and other benefits arising from labor relations for the previous three months.<\/p>\n

Once the request for bankruptcy is presented<\/strong> to the Judge can:<\/p>\n

1. Decide the application is complete<\/strong>:<\/span>\u00a0<\/span> the Judge on the same day or by the latest the following day, can dictate a decry of automatic admission of the application.\u00a0 If there are defects in the application the Committal will still take effect following the rectification of any defects within a maximum of 5 days.<\/p>\n

At this point the judge will send a summons to the debtor, along with the application for bankruptcy<\/strong>, requesting that he appear before him in a maximum of 5 days.\u00a0 The debtor can oppose the application but it must be done in the manner prescribed and offering the proofs that he deems support his opposition.<\/p>\n

The evidence of witnesses is not enough to prove the facts alleged by the creditor<\/p>\n

It should be advised that at this point that it is possible that the creditor or any other person with a legitimate interest can request the judge to adopt Precautionary Measures to secure the assets of the debtor<\/strong>. To this end the judge can require the creditor to pay a bond to the court to indemnify the debtor against any prejudice or damages that the Precautionary Measures may cause.<\/p>\n

2. Find the Documentation inadequate<\/strong>.<\/span>\u00a0 If the paperwork or the application for a declaration of bankruptcy<\/strong> is defective and the creditor does not rectify it within 5 days, the Judge can dictate a decry of automatic in-admission of the application.\u00a0 However, it is possible to appeal this decision.<\/p>\n

3. Find acquiescence or inactivity on the\u00a0 part of the debtor<\/span><\/strong>.<\/span>\u00a0\u00a0\u00a0Bankruptcy will be declared without holding a hearing<\/strong> or an examination of evidence attesting to the state of insolvency<\/strong> of the debtor (Article 18.1 Bankruptcy Act<\/strong>).\u00a0 This process then follows the same course as for a Voluntary Creditor\u00b4s Bankruptcy<\/strong>, when it is instigated by an insolvent debtor.<\/p>\n

4. If the debtor disputes the application<\/strong>:<\/span>\u00a0 the debtor must present his opposition in writing within 5 days of the summons and base it on the following facts:<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Non-existence of the facts (detailed in Article 2.4 of the Bankruptcy Act)<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Existence of the facts but not insolvency<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 The debtor must prove his solvency and he must also show his books of accounts to the court<\/p>\n

The Bankruptcy Act defines insolvency of the debtor as the inability to pay debts<\/strong>.\u00a0 What is relevant for the purposes of declaration of insolvency<\/strong> is that the debtor is in a situation that cannot pay his debts as they fall due.<\/p>\n

5. In case ofnon-appearance of thecreditor, or<\/strong>the appearance and failure of corroboration of his opposition<\/strong>:<\/span> if the judge finds that the objective facts prescribed by the Bankruptcy Act<\/strong> exist and that there are other possible creditors he will call a hearing of the other creditors before deciding on the application.<\/p>\n

Once the involuntary (necessary) bankruptcy<\/strong> has been declared, the debtor\u00b4s powers of administration and disposition of its assets are suspended and transferred to the appointed Administrators of Bankruptcy<\/strong>.<\/p>\n

Finally, it must be highlighted that although it is true that the law in Article 3.1 states that the request for a declaration of bankruptcy<\/strong> can be made by a single creditor, for the declaration of the necessary budget multiple creditors are required. If there are not multiple creditors at the time of the request, the judge can deny the commencement the insolvency process<\/strong>.<\/p>\n

Monika Bertram<\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Unlike voluntary bankruptcy proceedings which are commenced by the debtor,involuntary (necessary) bankruptcy proceedings are those which are requested by a legitimate creditor in accordance with Article 3.1 of the Bankruptcy Act.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1064],"tags":[714,713,195,716,718,7,719,533,162,711,41,712,715,532,720,531,717,710],"class_list":["post-1384","post","type-post","status-publish","format-standard","hentry","category-pubications","tag-application-bankruptcy-spain","tag-bankruptcy-act-spain","tag-debt-collection-spain","tag-declaration-of-bankruptcy-spain","tag-declaration-of-insolvency-spain","tag-eurojuris-espana","tag-insolvency-process-spain","tag-international-law-firms-network","tag-international-lawyers-spain","tag-involuntary-bankruptcy-proceedings-spain","tag-mariscal-abogados","tag-necessary-bankruptcy-proceedings-spain","tag-precautionary-measures-bankruptcy-spain","tag-spanish-law-firms-network","tag-spanish-lawyers-madrid","tag-spanish-lawyers-network","tag-state-of-insolvency-spain","tag-voluntary-bankruptcy-proceedings-spain"],"yoast_head":"\nInvoluntary 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