New Insolvency Law
In September 2004 a new Insolvency Law came into force in Spain. Some salient points of the law are set out below:
- The law applies to companies and individuals
- Application is made for the investigation of insolvency proceedings to the local Mercantile Courts by the debtor or a creditor(s) on the grounds of the insolvency, or imminent insolvency, of a debtor
- On acceptance of the application normally three Insolvency Administrators will be appointed as follows:
- An auditor or economist
- A solicitor
- A creditor who, if not a registered Insolvency Practitioner, then appoints a registered auditor or economist to act on his behalf.
- If a creditors arrangement is not achieved then a liquidation proceeding is commenced.
- There are many preferences including preferences for workers and for the State in respect of taxation and Social Security liabilities.
- Fees and costs are incurred by a creditor who aplies for an insolvency proceeding however he is compensated in that his debt receives some preferential treatment.