The reform of the bankruptcy law is about to complete one year, and the bankruptcy administrators – who are in charge of supervising the process during which a company or an individual goes bankrupt – warn of some dysfunctions caused by the legislative change .
“The reform is favoring fraud in tenders without mass, which have soared in the first half of the year, especially among individuals who cannot meet their debts”, warns Diego Comendador, president of the Professional Association of Bankruptcy Administrators and Restructuring and Insolvency Experts (Aspac).
According to the association, it has been harmful that the new law eliminates the requirement to appoint a bankruptcy administrator in this type of contests, characterized by the speed in the conclusion of the procedure due to the absence of assets of the debtor to respond to the debts.
“Unless the creditors decide to pay a bankruptcy administrator out of their own pocket, no one controls the debtor’s movements before the declaration of bankruptcy without too much and this can encourage the debtor to operate fraudulently in the previous weeks”, warns Comendador . In addition, the President regrets that these types of contests do not include a qualification piece, and that debtors can therefore avoid being found guilty (and disbarred).
The statistics confirm that the phenomenon is on the rise after the reform. According to the College of Registrars of Spain, 4,258 tenders without mass were declared in the second quarter of the year, which represents an increase of 336.3% compared to the same period last year and an increase of 24% compared to the first quarter of the year.
This type of competition accounted for 70% of the total (the rest is divided between ordinary and special), while natural persons took the lead in almost 80% of the total number of competitions declared between April and June.
“It is not negative that this type of competition has exploded because it means that more and more individuals are aware of this procedure that allows them to take advantage of the Second Chance law. Since they are exonerated from the repayment of their debts, they can start over again”, clarifies the lawyer and administrator Francisco Lacasa, of the Barcelona law firm AGM, who doubts that the lifting of assets is a common crime of this type of situations In any case, Aspac advocates a modification of the bankruptcy reform that guarantees more control over the administration of debtors’ assets.
The association also regrets the ineffectiveness of the special procedures for micro-enterprises. With the aim of improving the efficiency of the system, the bankruptcy reform activated this mechanism that allows the same entrepreneur to self-manage the bankruptcy process only through the internet. But their effect has been very limited: there were barely 11 in the first quarter and 88 in the second quarter of the year, according to data from the registrars.
In addition, the association has been demanding since 2014 the approval of a Bankruptcy Administration Statute that promotes the training and preparation of these professionals who, under the appointment of the judge, supervise that the process is carried out with the maximum guarantees.
