Are Barça’s accounts with Van Gal going well or badly? That was the original title of one of the Financial Analysis exams in my second year of my ADE degree back in 1997, where we were asked to analyze Barça’s accounts. What times those were! An exceptional professor, Don José María Gay de Liébana, with whom two years later I began my professional journey as an economist. What creativity, ladies and gentlemen! That’s when I realized that creativity does not conflict with any known scientific field, not even, as the legislator has demonstrated, in the science of law, with the approval of the long-awaited Consolidated Text of the Bankruptcy Law (TRLC): Creativity and innovation in its purest form. Now, creativity does not always go hand in hand with prosperity, and from time to time it borders on the hilarious.
Two years after the approval of the TRLC, it is a good time to analyze the impact and evolution of the most significant changes introduced by the standard.
It is true that an avant-garde spirit emerges from the explanatory memorandum, with the establishment of new pre-bankruptcy and bankruptcy institutions, and with a clear objective: the maintenance of the business fabric and the improvement of what is known as the second chance law, with the configuration of a right and not of a benefit or forgiveness, very typical of our Judeo-Christian culture. But let’s see if during this time the legislator’s aspirations have been fulfilled.
There are four protagonists in the latest reform: i) the restructuring plans; ii) the third book with the special procedure for microenterprises; iii) the bankruptcy of natural persons, and iv) the bankruptcy without mass.
As for this new pre-bankruptcy institution, which replaces refinancing agreements, seems to have been well accepted both on the part of debtors and creditors. A priori, it debuted with the restructuring of large companies, where the large funds made their credits prevail to subject the debtor to their own restructuring with the loss even of their corporate rights; But in the last year we have seen medium-sized company restructurings with good results. The assessment, without a doubt, is very positive and everyone who is dedicated to the world of restructuring and insolvencies has to learn to dance to this new song. Without a doubt, law firms and economists face an important challenge that provides an unbeatable opportunity as a business model.
However, in order for us to improve protection against business crisis situations in the early stages, two more important things are needed: anticipation and training. The great failure of our bankruptcy system has always been the entrepreneur’s lack of anticipation in times of crisis. The bankruptcy procedure, for the most part, has been liquidation. But training also has a very relevant role, the businessman has to have advisors who know how to guide him and who prescribe this type of institutions: what is not known does not exist.
And what to say about the special procedure for microenterprises? There are mixed feelings in the legal profession. Although it is true that, when the ICAB Regulatory Commission analyzed the bill, it was perceived as a mechanism with little guarantee – the project dispensed with legal assistance and procedural representation. But over time, and after the amendments introduced incorporating the preceptivity of lawyer and attorney, we saw an opportunity to advance in the digitalization and mechanization of judicial procedures through standardized forms that allow data analysis as a tool in decision-making. legislative decisions.
The part that the data orientation forms offer us allows analysis and predictions that will allow the reasonableness of regulatory changes. This is an important advance in the digitalization and mechanization of judicial procedures.
It is clear that there is still a long way to go, but without a doubt the future is thereand very likely communication with the courts through standardized forms will also end up being extended to the rest of the procedures.
Regarding Second Chance, the norm has been formed or deformed, depending on how you look at it, throughout these nine years since the entry into force of the law with the most socio-economic impact promoted in our country. Nine years analyzing and promoting legislative measures from the Regulatory Commission of the ICAB-Second Chance Group, which ended with a somewhat dull and unimaginative reform where the initial problems prevail and others appear that did not exist.
Although it is true that this mechanism has changed and will change the lives of thousands of people, the legislator emphasizes the overprotection of public credit and the impossibility of giving a way out for those businessmen who are burdened with public law debts, but we already know who legislates. Ultimately…The general feeling of the legal profession is of a notable setback in the rights of business owners.
and I leave the contest without mass to the end, but, without a doubt, it is the great protagonist of the reform; Currently, this type of procedures accounts for more than 80 percent of the total of bankruptcy claims filed in the last year.
It was necessary to have a quick declaration and filing mechanism for those bankruptcies without assets that are uneconomical and collapse the commercial courts. However, bankruptcy without mass has become a kind of procedure that is preceded by a liquidation in the hands of the debtor without sufficient guarantees for creditors. And I don’t think that was the legislator’s will. We are facing an opaque mechanism without judicial protection. Although it is true that any creditor who holds at least 5 percent of the total declared debt can request the judge a quo to appoint a Bankruptcy Administrator to prepare a report in order to analyze possible actions for reintegration or reprehensible conduct in a possible bankruptcy qualification, is not enough to guarantee a procedure with consequences, in many cases, devastating for many affected creditors.
Some judges, with good judgment, call the debtor to account for the substantial modifications made since the last annual accounts and financial statements presented in the bankruptcy application. In my opinion, this economic report should be mandatory in any bankruptcy claim, although at the moment there is no legal basis for its requirement.
Octavio Gracia. Member of the Working Group of the Second Chance Group of the ICAB-CICAC Regulatory Commission
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