Written by Josep Conesa
Employment and insolvency lawyer
NEW Rules for Asset-Less Insolvency Proceedings (Art. 37 bis)
This procedure applies in the following circumstances:
- a) The debtor has no assets or rights that are legally attachable.
- b) The cost of realising the debtor's assets and rights would be manifestly disproportionate relative to their foreseeable market value.
- c) The debtor's assets and rights, free of encumbrances, have a value lower than the foreseeable cost of the proceedings.
- d) The charges and encumbrances existing over the debtor's assets and rights exceed the market value of those assets and rights.
-
It would be advisable for the applicant to provide (together with the insolvency petition) the most relevant information for assessing the value of the assets and rights, the amount of existing charges and encumbrances, and the outstanding secured debt at the time of filing.
-
-
It would be advisable for the court to order an investigation into the debtor's assets through the Judicial Neutral Point (Punto Neutro Judicial), Spain's centralised judicial asset-tracing system.
- Article 37 ter allows 5% of creditors to request the appointment of an insolvency director to:
- Verify that no voidable transactions exist.
- Determine whether there is sufficient evidence to bring a corporate liability action against the directors or liquidators.
- Determine whether there is sufficient evidence that the insolvency could be classified as culpable (i.e. caused or aggravated by the debtor's misconduct).
- If this is the case, a supplementary order will be issued and liquidation proceedings will be opened so that the insolvency director may pursue avoidance actions and corporate liability claims (Art. 37 quinquies). If the director fails to do so within two months, the creditors who requested the appointment may bring those actions in the following two months, subject to the costs regime established under insolvency legislation (Arts. 122, 232 of the Insolvency Act).
INSOLVENCY director REMUNERATION IN ASSET-LESS INSOLVENCY PROCEEDINGS
a) Nature of the Insolvency Administrator's fees for issuing the report
This is an activity falling within the Insolvency Administrator's own functions by virtue of that role. Accordingly, the nature of this remuneration is consistent with that of the Insolvency Administrator's general fees. As a result, should a supplementary order under Article 37 quinquies be issued, any amounts already paid in respect of this report would be deducted from those corresponding to the common phase.
On the other hand, the law — having regard to the exceptional circumstances at hand (asset-less insolvency proceedings) — provides for a special rule whereby such fees are to be paid by the requesting creditor(s). That said, as a consequence of what is set out in the preceding paragraph, should a supplementary order under Article 37 quinquies be issued, these fees — which constitute a claim against the insolvency estate (ex Article 242.9 TRLC) — may be recovered by the creditor(s) who paid them.
b) Quantification of fees
As regards the determination of the amount of remuneration for this report, given the law's silence on this point and bearing in mind that we are operating within the scope of the Insolvency Administrator's fees, reference must be made to the criteria set out in Royal Decree 1860/2004 of 6 September establishing the scale of fees for insolvency administrators, which currently remains in force.
That said, given that the report must be completed within one month, it is reasonable to apply the criteria established in the Insolvency Administrator's fee scales for the arrangement and liquidation phases — which take into account time periods and provide for 10% of the amount applicable under the common phase for each month — without the limits set out in Article 86 TRLC being applicable.
On the other hand, in anticipation of foreseeable situations where assets may be minimal and liabilities not particularly significant (which could result in the setting of negligible fees), a minimum threshold of €500 is established for the remuneration covered by this report.
Therefore, by way of conclusion, when determining the fees payable for the preparation of this report, the court must apply the criteria set out above, unless it identifies circumstances that justify departing from the figures resulting from those parameters.
c) Timing of payment
As regards the timing of payment of the Insolvency Administrator's fees for the preparation of this report, Article 37 quáter makes no reference to this matter.
In order to avoid the difficulties that could arise from payment on a retrospective basis — including issues relating to which court would have jurisdiction to hear any related claim — we consider it appropriate that payment should be made within 5 days of the Insolvency Administrator's acceptance of the appointment, and in any event prior to the preparation of the report.
