If your company is in a situation of insolvency and you have been forced to open a creditor’s contest, at Lawyers & Accountants we can and want to help you, since we specialize in bankruptcy law, and we will take care of informing and advising you, as well as all management, ensuring compliance with Article 2.1 of the Bankruptcy Law.

We have a large team of lawyers specialized in bankruptcy/creditor’s contest in Madrid, who will be in charge of managing the insolvency proceedings in its entirety, simplifying and expediting all the corresponding procedures, which will allow you to save time, reduce costs and meet deadlines.

If you are looking for a bankruptcy lawyer, at Lawyers & Accountants we offer a comprehensive management service for contest of creditors. Get in touch with us

What are creditor’s contest?

When a company is in insolvency, the creditor’s contest, insolvency proceeding, may be the best option to continue the business, without debts being an impediment to doing so, thus making it viable again in the future, or to put an end to business activity in an appropriate manner.

This is a legal procedure whose objective is to solve the problems of insolvency and/or lack of liquidity, allowing to the creditors the collecting of debts that are overdue, and looking for the most appropriate solutions not to bring a business to bankruptcy.

The creditor’s contest applies to all types of business:

• Natural and/or legal persons.
• Self-employed persons.
• Small, medium and large enterprises.

 

The creditor’s contest must be requested to a judge, when, as established by the Bankruptcy Law, a business cannot comply with its credit obligations, because it is experiencing serious economic difficulties. On the basis of the documentation submitted, the judge shall decide whether to grant the creditor contest.

Once the creditor’s contest has been submitted, the judge immediately suspends all payments to be made by the company, and will freeze the interest associated with the debts, for the duration of the creditor contest.

Likewise, it will be the judge who takes the reins of the company, delegating its control to insolvency administrators (lawyer, auditor or economist, and representative of creditors).

Types of creditor’s contest/insolvency proceedings

Voluntary creditor’s contest/Voluntary insolvency proceedings

We are talking about voluntary creditor’s contest/voluntary insolvency proceedings, when it is the insolvent company itself that makes the request on a voluntary basis.

The application must be made within two months from the date on which the insolvency problem is detected, as prescribed by the Bankruptcy Law, since otherwise it could be sanctioned and even criminally charged. To do so, the following documents must be submitted:

• Accounting documents.
• List of creditors.
• Report of cases that led/giving rise to insolvency.
• List of property and rights you own.
• Feasibility proposal.

Necessary creditor’s contest / Necesary insolvency proceedings

Instead, the request is made by one of the partners or creditors, it shall be known as a necessary creditor’s contest/necessary Insolvency procededings. In this case, the judge will be responsible for handling the request, and he will decide if it is finally carried out.

In this type of creditor’s contest, the application must be based on facts demonstrating the failure of the company to comply with general obligations.

Stages of insolvency proceedings

Assessment of the situation

The directors shall determine the value of the set of assets and rights of the enterprise, which may be used to satisfy creditors, within two months.

Process solution

There are two different types of end of creditor’s contest:

• Entering into a creditors agreement:An agreement is reached with the creditors to reduce the amount of the debt and to defer payments, in order to facilitate its viability.
• Liquidation of the company:It occurs when an agreement cannot be reached with creditors, the agreement is not complied with or the company wishes to be liquidated. In this case, the law establishes an order of preference to collect, protecting weaker workers.The creditor’s contest will plead guilty or not guilty. In case of guilt, there will be legal effects for the employer, such as the disqualification to administer companies or the payment of compensation.

At Lawyers & Accountants we take care of your heritage and look for thoughtful solutions

If your company is in insolvency and you are considering the possibility of applying for a creditor contests, at Lawyers & Accountants we will advise you to find the best solution to safeguard your assets, and thus avoid personal liability of both partners and directors.

We are specialized in bankruptcy law and in the registration of creditor’s contest, and a bankruptcy lawyer will treat your particular case, personalized and with total professionalism, taking care of the management of the contest to obtain the best solutions for you and your business, and comply with the current Bankruptcy Law.