07 Sep What happens if I am found guilty in a bankruptcy procedure?
If you have a company and you are currently or you may be in the near future in a insolvency situation due to the impossibility of paying the current payment of your obligations, with suppliers, Finance, Social Security, etc., as the deadline expires, to solve this problem of insolvency exist the “arrangement with creditors” according the Spanish Bankrupcty Law.
This procedure pursues two purposes. The first and the most important is the survival in the future of your business and, secondly, if this is not viable the liquidation of the company. Therefore, it is a system that tries to help companies or self-employed professionals who are in a state of insolvency through an orderly mechanism to deal with debts. This procedure applies to all types of legal persons, SMEs or large companies. It is a real and complete judicial procedure, which requires a legal counselor, attorney, and involves all creditors.
But you can not fall into the mistake of thinking the presentation of the arrangement to the Court leaves everything in the hands of the court and that extinguishes our responsibility. Moreover, our responsibility begins even before the arrangement has been declared.
Obligations of the debtor before and during the contest.
Theboard members of the debtor company or whose solvency is imminent are required to submit the arrangament. And within 2 months of being aware of the insolvency, or since they should have known. As we can see, it is a strict obligation and that the presentation of the contest cannot be delayed without consequences. In addition, it has an obligation to present it scrupulously fulfilling all the documentary requirements: inventories of goods and rights, staff of workers, creditors, relation with banks, special powers.
In which cases the Court can declare the guilty plea to the board members?
Before finalizing, the bankrupcty is “qualified”, that is to say, it is studied which has been the responsibility of the board members of the company and for that reason can be “guilty” or “non-guilty” from the consideration of if in the insolvency has the fault of the debtor or any of its legal representatives.
That is why it is especially important to plan ahead of time the presentation of the arrangement, that is, once we see options that the viability is complicated, because that may depend on whether or not the contest would be guilty. In general, guilt is declared when situations arise that, because of their special gravity, the law understands that they must be punished.
This behavior contribute to create or to aggravate the insolvency. Some of them are presumed, that is to say, unless proven otherwise, the law presumes guilty when the contest is not submitted within the established deadlines, when it does not collaborate with the Judge, or when it does not carry the accounts being obliged…
Others apply without the possibility of even demonstrating otherwise, the absence of guilt. For example when double counting are taken or there are serious inaccuracies, when there is a rise of goods by the debtor and especially when 2 years before the declaration of the contest, assets are subtracted from the assets of the debtor. These sales of the estate can be rescinded and the goods brought back to the contest.
Effects of guilty plea.
When the Court declares pleading guilty to the board members and its accomplices usually apply 2 penalties:
1. The disqualification to manage property of other people that can be up to 15 years.
2. The loss of any kind of right that had in the company. if we as board members had money pending from society, we lose that right and whatever we have.
Finally, and should not be lost sight of, if the actions that lead or provoke the guilty plea in the arrangements are both, intentional and negligent, the Judge can even refer the procedure to the Public Prosecutor’s Office may give rise to a criminal procedure if the conduct has been criminal. I
If your company or business is in trouble, in addition to trying the continuity of it by all means it is advisable to consult with specialists to avoid future damages. For more information do not hesitate to contact the team of Navarro Llima Abogados.