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Towards a new reform of the Insolvency Law?

Towards a new reform of the Insolvency Law?

Insolvency administrators request the new Government to consider more flexible conditions for future reforms of the Insolvency Law. This post offers you some key points about the modifications that have been introduced in the last reforms.

18 may 2016

Until 17 reforms from 2011. The Insolvency Law 22/2003, of 9 July, has gone through numerous modifications in the past years, a tendency that does not seem to come to an end judging from the vindication of trustees in insolvency, who demand the next Executive to agree to negotiate a relaxation of the last reforms of  the law, introduced by the Law 40/2015 of the Public Sector and which affects to their remuneration.

‘Some unsatisfied trustees in insolvency, as well as media, have created the myths that haunts us’, affirms Diego Comendador, Vice-President of the Asociación Profesional de Administradores Concursales, ASPAC (Professional Association of Insolvency Administrators). Myths such as the idea that they agree with the judges their designation or that they earn excessive fees.

With each reform there have been introduced new procedures that were not considered in previous laws, as in the case of extrajudicial agreements of payment, the improvement of the summary procedure, or those referring to the figure of the insolvency administrator and the functions he or she performs. In chronological order, the last reforms have been:

Law 38/2011, from 10 October, which reforms the Insolvency Law 22/2003, from 9 July, which modified the composition of the insolvency administration and introduced the article 176bis related to the conclusion due to insufficiency of active mass.

Law 14/2013, from 27 September, which supports entrepreneurs and their internalisation, which introduced the X Title of the Insolvency Law related to the payment extrajudicial agreements.

Law 25/2015, from 28 July, of the second chance mechanisms, the reduction of financial burden and other measures of social order, which introduced the article 178bis related to the exoneration of unfulfilled liability.

Law 40/2015, from 1 October, which creates the account of duty tax guarantee which allows controlling the contributions of insolvency administrators.

Creditors meetings in Spain are over 5 000 per year since 2009

New modifications

With the passing of the Regulations on the Insolvency Administration Statute it will be effective the account of duty tax guarantee, to which insolvency administrators will have to contribute with a 2.5%, a 5% or a 10% of their salary, depending on the amount. The aim of this redistributive measure is for insolvency administrators from the most profitable meetings to finance those which are not so beneficial. Comendador thinks that the character of this initiative is ‘illusory’, since ‘from the 3 000 meetings in which there are earnings, some amount of money could be extracted to pay the 2 000 that have no reward’.

The reform that is already effective is the limitation of remuneration to insolvency administrators, who could not earn more than 4% of the mass or more than 1.5 million of Euros. Moreover, the judges will be in charge of revising upwards the 50% of their salaries in every meeting.

Creditors meetings in Spain are over 5 000 per year since 2009, reaching 9 143 in 2013. The vast majority has affected companies and a smaller percentage  has affected natural persons without entrepreneurial activity. Last year there were 4 916 creditors meetings in our country.

Image source: cincodias.com

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Published by: Pablo Martí Prats
 
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