The so-called "Concurso de Acreedores" is an insolvency procedure aimed at resolving an extraordinary economic situation of crisis. Each of its four stages aims to ensure that as many creditors as possible can expect to recover their claims.

Royal Legislative Decree 1/2020, which approves the revised text of the Insolvency Act, is the regulation in charge of structuring the insolvency procedure, which consists of the following phases:

1. Common phase

It begins after the declaration of bankruptcy and its objective is to analyse the assets of the bankrupt company.

In this phase, the judge appoints an insolvency administrator who must draw up a report accompanied by an inventory of the assets and liabilities as well as the list of creditors. It will be up to the insolvency administrator to determine which claims are to be satisfied out of the assets. All of my clients' claims have been notified to the insolvency administrator in due time and form part of the list of creditors.

This phase will end with the issuance of the final report by the insolvency administrator with the necessary modifications following the challenges that have been made to the provisional report and with the Order issued by the judge putting an end to the common phase. In this same order, the judge will agree to the opening of the Agreement phase.

At the time of writing this post, October 2022, we are in this phase, challenges have been presented and are now in their way to be resolved by the Judge that then will issue the Order that puts an end to the common phase.

2. Agreement phase

The main objective of this phase is for the debtor to reach an agreement with the creditors, without being necessary to liquidate the assets. A proposal for an arrangement may not be submitted if the debtor has requested the liquidation of the assets.

If the legal period established for submitting a proposal for agreement has elapsed without it having been submitted or if none of the proposals submitted has been admitted for processing, the judge will decide ex officio to open the liquidation phase.

3. Liquidation phase

The liquidation phase takes place when no agreement has been reached. In this phase, the debtor's assets are liquidated so that they can be used to satisfy the outstanding claims of the creditors.

In the liquidation phase, the insolvency administrator replaces the administrator in his powers of administration.

The liquidation operations will be carried out in accordance with a liquidation plan to be drawn up by the insolvency administrator, which will require the approval of the judge. Court approval of the plan will be sufficient authorisation to dispose of the assets and rights of the insolvent party that are subject to the claims. The payment of claims is subject to a priority determined by law.

4. Qualification Phase.

The insolvency proceedings will be classified as fortuitous or guilty.

The insolvency proceedings will be classified as guilty if in the generation or aggravation of the state of insolvency there has been fraud, gross negligence, or negligence on the part of the debtor administrator.

Some of the cases in which the debtor administrator may be held liable in insolvency proceedings are failure to keep the company's accounts, double accounting or relevant irregularities, failure to comply with the duty to request the declaration of insolvency when the state of insolvency is relevant, failure to prepare the annual accounts and failure to submit them to an audit.

The insolvency proceedings will be declared as fortuitous when there have been none of these elements in the actions of the debtor administrator.

Both the insolvency administrator and the Public Prosecutor's Office will draw up a report and an opinion respectively in which they will qualify the insolvency proceedings and it will be then that the judge will issue a ruling declaring the insolvency proceedings to be guilty or fortuitous.

If the debtor administrator is declared guilty, he may have to meet the company's equity deficit with his own assets.

It is important to note here that the timeframes for the processing of an insolvency proceeding and its phases, although established by law, are very difficult to determine exactly, so knowing their duration is extremely complicated.