Government approves new bankruptcy law in attempt to save viable insolvent businesses – CVBJ

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ALEJANDRA OLCESE

Updated Tuesday, December 21, 2021 – 2:48 PM

The Minister of Justice, Pilar Llop Emilio NaranjoEFE

The Government approved this Tuesday in the Council of Ministers the bill reforming the Competition law and transpose the European Insolvency Directive, with which you intend “save viable businesses” who cannot meet their debts due to the crisis derived from the pandemic.

“The regulations that we are going to send to the Chambers are approved in a context of crisis caused by the pandemic and in the process of recovery, ”admitted the Minister of Justice, Pilar Llop, at a press conference after the Council. This standard complements the Crea y Crece law and the Startups law which are in the process of parliamentary procedure and which imply commitments by the Government to the European Commission within the framework of the Recovery Plan.

The minister explained that the objective of the standard approved on Tuesday is that “no viable business has to lower the blind“” We do not want anyone to stop doing business because of a failed project that will weigh them down forever, “he said.

“It is not a question of making any business work at any cost, which would be the zombification of businesses, but of keep those that are truly viable in operation. By viability we mean those with an operating value greater than the liquidation value, ”he added.

Among the novelties implied by this rule is the impetus to early restructuring, and the Debt Relief For Good Faith Debtors -including consumers-.

In addition to integrating the novelties of the directive, the executive took the opportunity to undertake other reforms, such as the broaden the scope of restructuring, which now affect both assets and liabilities, and not just liabilities as it used to be.

This assumes that Business can resort to sale of production units of the company to meet its debts, which was not provided for in the legislation but which had already been done before the commercial courts.

Digital micro-SME competition platform

AT SMEs and micro-SMEs They will benefit from a different treatment, even though they represent 98% of the Spanish productive fabric. The general regime will be applied to them with a few oddities for reduce costs and simplify procedures.

“A specific procedure is in place to micro-enterprises improving the telematics procedures without having recourse to a notary or an auditor. will create a settlement platform which reduce delays and costs and increase transparency ”, defended the Minister.

However, this system generated critical Among the sector of bankruptcy administrators who are struggling with an IT tool developed with a public budget and without the intervention of judges or administrators to do all the work of liquidation.

The government also explained that the new standard “facilitates the debtor in good faith can cancel his debt, the deadlines for reaching the final exemption (called second chance) are reduced and it is possible to opt for immediate exemption – by liquidation – or to opt for a payment plan or provisional exemption ” .

The new law also advances in the professionalism, although a bankruptcy administrator status is not created as demanded by the industry.

Until the date, UK was the European country with the most attractive bankruptcy laws, which is why different companies on the continent used to resort to “Pre-bankruptcy tourism” to deal with their situation there, Llop stressed, something that changed after Brexit.

“With this rule, a range of legislative competence between the different states members because whoever transposes the directive best will create the best recovery scenario, ”he stressed.

The Minister took the opportunity to also promote the last extension of the bankruptcy moratorium approved, which exempts companies from the obligation to file for bankruptcy and removes the ability of creditors to seek necessary bankruptcy (requesting that companies owing them money be forcibly declared bankrupt in an attempt to recover their bankruptcy). debt).

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