"The history of bankruptcy law is the history of its reforms" With this phrase the explanatory memorandum of the Consolidated Text of the new Bankruptcy Law (LC) begins, which the Council of Ministers approved on Tuesday, May 5 by Royal Legislative Decree.
Indeed, after so many reforms of the current LC 22/2003, its reading and interpretation, and even the understanding of the internal logic of the current bankruptcy system, has long required the promulgation of a new LC.
The three keys to the new LC, which will take effect on 1th September 2020, are the regularization of the system, clarification and harmonization of the numerous legal insolvency rules that they were born at different times, not always from coincident conceptions.
Reading the new LC shows a unification of terminology and the simplification of legislative formulas. The new LC contains 752 articles, multiplying the current LC by 3, and is divided into three books: bankruptcy, pre-bankruptcy law and private international law.
It is important to note that with this new LC, the legislator does not exclude that the insolvency law reform process has ended, since Spain has yet to transpose Directive (EU) 2019/1023 of the European Parliament and of the Council, of June 20 of 2019, which aims to establish alert mechanisms against the risk of insolvency, to give a more complete and coherent regulation to the processes of preventive restructuring of debts, simplify bankruptcy law, increase efficiency, reduce costs, and expand the possibilities of obtaining the benefit of debt relief.
Regarding the so-called second chance mechanism, It is criticized that the new LC has not addressed the existing problem with the debts of businessmen and individuals with Social Security and Finance. Issue that becomes more relevant when until very recently the Ministry of Justice announced that the exoneration of debts would reach creditors under public law.
This is even more reason to exist, given that there is a clear community mandate for the improvement of the legal system, with which employers and individuals can have a real and effective second chance.
Now would be the time to reinforce the second chance mechanism given the imminent economic crisis as a consequence of the COVID-19 health crisis, and the foreseeable tsunami of competitions that it will provoke. Most of the professionals and legal agents related to commercial law agree that the businessman who is not released from his slab with Social Security and the Treasury, is a businessman forced to remain eternally in "clandestine" activities and condemned to develop in the economy. submerged, that so many social and economic problems are emerging in these times of global pandemic.
We should not forget, on the other hand, that in parallel to the Consolidated Text of the new Bankruptcy Law, we will have to coexist in the coming months with the "emergency regulations" issued during the health crisis of COVID-19, which regulates, among other important aspects such as recovery of the figure of the counterclaim; permission for companies and freelancers in a state of insolvency not to request bankruptcy until December 31, 2020; the postponement of one year of the debtor's duty that had an agreement signed with the creditors or the possibility of submitting a modification proposal or a new request to the debtors who had an approved refinancing agreement.
It seems that the new Bankruptcy Law will not be the definitive one and will have to undergo future revisions. And being in the times of the coronavirus, we should ask the legislator the same question that Gabriel García Márquez asked himself at the end of "Love in the Time of Cholera" "AND How long do you think we can continue in this back and forth?" Hopefully it's not the "LifetimeFlorentino Ariza replied.
