The massive presentation of ERTEs, caused by the crisis generated by COVID-19, will lead to an avalanche of bankruptcy proceedings. At least this is the general opinion of the jurists (judges, lawyers, attorneys, etc.), economists, the main consultants and analysts.
Unfortunately, the discouraging statistics of entrepreneurs and companies that do not "come out alive" from the bankruptcy are known, that is, with an agreement approved by the creditors that allows them to continue the activity.
On the other hand, all the specialized legal operators have coincided in numerous criticisms of our bankruptcy law from the moment it was approved in 2003, for not being equipped with enough tools for refinancing, due to the limited agility of the structure of the bankruptcy procedure, due to the little flexibility of the procedure and the non-attribution of greater powers to the Commercial Judges.
At Ribelles Abogados we agree with these criticisms, but we are optimistic and fortunately we have the experience of having obtained numerous successful examples of clients whom we have helped to successfully urge and overcome the bankruptcy or second chance procedure mechanism.
Without a doubt, there are two keys to saving a company or an entrepreneur through bankruptcy:
The first of these is, without a doubt, applying the economic and legal measures provided for in bankruptcy law well in advance. Unfortunately, the majority of companies that end up in liquidation, do so due to a late filing of the bankruptcy, when the company is too depleted of its own resources and harassed by legal proceedings filed by its creditors, with annotations of embargo and other limitations.
The second key is the maintenance of the activity and essential assets, liquidation of the deficit business lines and with adjustment of the labor structure and non-essential operating expenses. These measures must be accompanied by a business plan and budget that is followed promptly after the completion of the bankruptcy procedure.
On the occasion of the Royal Decrees discussed in previous posts, The procedural deadlines and the obligation to present a contest are paralyzed. From our point of view, this time should be used to carry out an accurate analysis and diagnosis of the economic and legal situation with which to determine whether the bankruptcy procedure should be used; or the forecasts that this could happen. And if so, use it or plan it as soon as possible.
Another tool little known by companies is the possibility of presenting a "tender with liquidation" and simultaneous sale of the productive unit, in the event of having an offer that safeguards jobs and guarantees the continuity of the activity.
Our Commercial Courts are processing urgent requests, so it would be possible to carry out this emergency operation in critical cases.
On the other hand, regarding the mechanism of the second opportunity for individuals (businessmen or not), due to the situation of paralysis of procedural deadlines, in principle urgent actions will not be required, but it is also advisable to provide greater time forecast and advance notice. a possible economic collapse or even of the Courts themselves, and a coordinated study of the personal situation and the situation of third parties such as other guarantors, or even the company run by the individual in insolvency.
