"The new Bankruptcy Law aims to save viable companies, with a priori more agile mechanisms."
On September 26, 2009, the Bankruptcy Law Reform of the Insolvency Law. Schematically, is it meeting the objectives set out in its explanatory memorandum?
It is true that we have practically not had enough time to be able to check the benefits or shortcomings of Royal Legislative Decree 1/2020, of May 5, which approved the Consolidated Text of the Insolvency Law and approved a reform that affects a third of the regulation and involves a structural change in the insolvency management model, at a particularly delicate time for the Spanish economy and when the basic indicators of the same indicate a possible hot autumn for corporate restructuring.
The reform of the consolidated text of the Insolvency Law aims at the transposition of Directive (EU) 1023/2019, on preventive restructuring frameworks, debt waivers and disqualifications, and on measures to increase the efficiency of restructuring, insolvency and debt waiver procedures. In addition, taking advantage of the necessary transposition, other adjustments not related to the Directive are introduced, which aim to have agile and efficient instruments that improve insolvency proceedings to facilitate the maintenance of viable companies and the rapid and orderly liquidation of those that are not.
As to whether it meets expectations? Well, the truth is that we will have to wait, but the truth is that I am waiting, and I believe in the benefits that it can bring. Obviously, there are points and issues that can be improved, but I insist on waiting and seeing the short term.
¿Do you believe that the strengthening of the pre-bankruptcy phase and restructuring plans can be a useful tool to save viable companies from bankruptcy?
It seems that the market expected an increase in restructurings thisfall, but in my opinion the wave will be much more intense in 2023. Thus, the approved reform seems to facilitate debt negotiation processes by giving more power to creditors, and we, advisors, must be prepared, where funds, I believe, will have a lot to say. In this new scenario, creditors gain importance/presence in the decision of the company's future, not only its shareholders, I think, as it could not be otherwise. I believe this will avoid deadlocks, and we will really see the consolidation of the restructuring as a way of salvation.
The reform incorporates into our insolvency legislation the Pre-pack to try to obtain the highest possible price in the sale of the productive units of the debtors that intend to file for insolvency. Will it achieve a greater economic satisfaction of the creditors, and a more agile processing of the procedure?
This is a novel figure that is incorporated into our insolvency legislation, consolidating the protocols that had been applied by certain Commercial Courts, such as Barcelona or Palma de Mallorca, taking the examples of neighboring countries, such as the Netherlands or the United Kingdom, where this mechanism for the sale of assets already existed prior to the commencement of the judicial proceedings for the declaration of insolvency.
I believe that, in short, with this new mechanism, the aim is to obtain a greater economic satisfaction of the creditors, and amore agile processing of the bankruptcy proceedings, and effectively to be able to save the activity of the viable companies. Furthermore, I believe that it is a way to save the business activity in general, since the debtor sells the activity, it is saved, the business fabric survives, and of course the jobs, within the perimeter of the UPA as well.
Has the legislator granted business units or productive units (BUs) a key position, so that PU purchases are increasingly used, as their benefits for the economy in general are evident?
Indeed. That is what I was referring to in my answer to the previous question. What is clear is that this new law aims to save viable companies, with a priori more agile mechanisms, and therefore the business fabric of this country, which has suffered so much in recent years.
Could the publicity of the resolution discourage the debtor from making spurious use of the benefits of the pre-contests?
I do not think so, since it is clear that such publicity can be avoided, and I refer to Article 591 of the TRLC, which provides for the possibility of the communication being kept confidential. And, on the contrary, the current price provides many "protective barriers" to debtors, such as paralyzing executions, non-acceptance of requests for insolvency proceedings or suspension of the duty to agree to dissolution. In addition, the time that has been given is considerable, 3 months and extendable, therefore, I believe that it will be a very interesting figure.
The new regulation allows for a decent remuneration to be paid to the professionals appointed in individual competitions. Will this circumstance allow for a greater and better specialization of these professionals, which will result in the improvement of the service provided by such professionals?
Indeed; how the mediators' fees were reduced was an incredible fact... it seems to be forgotten that we professionals have the bad habit of also paying our bills. Such circumstance was applied to the out-of-court payment agreements prior to the consecutive insolvency proceedings which, attention, were reduced by a barbaric percentage, 50% or even 70% of the mediator's fees compared to those resulting after the application of the Royal Decree 1860/2004 of September 6. This circumstance meant that most professionals did not accept the appointments made by the Notary, Chambers of Commerce and/or Mercantile Registry in the aforementioned cases; but not for lack of diligence or professionalism, because it is an important job, in which you employed personnel and resources, but which did not obtain reward/remuneration. For all these reasons, it is true that we have the lack of the regulation of the insolvency administration, but the regulation now in force, seems to allow the work to be carried out, with experts who deploy all their assets, material and knowledge.
Source: Legal Today
