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"Restructuring experts" for attend to the debtor and creditors: keys to bankruptcy reform


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Ibon Hualde

Full Professor of Procedural Law of the University of Navarra

José Carlos González Vázquez

Senior Associate Professor of Commercial Law of the Universidad Complutense de Madrid

 The last reform of the bankruptcy rules and regulations , and there are several dozens of them, is ready, just at a time when a growth of bankruptcy applications is expected, once the "bankruptcy moratorium" ended on June 30, 2022, which determined that the companies in insolvency status were not "obliged" to request the bankruptcy. The reform, in this case, obeys the transposition of the European Directive on preventive restructuring and second chance and has been definitively approved by the plenary session of the Executive Council of the congress last August 25, and is expected to enter into force this September. The aforementioned EU directive stresses the need to seek procedures to help viable companies with financial difficulties to restructure their debt, without the need to file for insolvency proceedings. To this end, the reform creates the figure of the expert in corporate restructuring, who must have legal, technical and financial knowledge, and who must be able to assist the debtor and the creditors throughout the negotiation process between both parties, attend . And the fact is that the Insolvency Law has shown, since its beginnings and in spite of the multiple reforms it has undergone, to be incapable of remedying in time the status of heavily indebted companies and in status of illiquidity. In reality, the insolvency proceeding continues to be a form of "burial" of companies in crisis through the liquidation solution. 

The main novelties of the insolvency reform can be summarized in the following six. Firstly, the so-called restructuring plans are introduced, legally defined as a pre-bankruptcy instrument "aimed at avoiding insolvency, or overcoming it, which makes it possible to act at a stage of difficulties prior to that of the current pre-bankruptcy instruments, without the stigma associated with bankruptcy and with characteristics that increase their effectiveness"; and, at the same time, the current refinancing agreements and out-of-court payment agreements are eliminated. Secondly, entrance is given in the insolvency regulation to the referred expert in corporate restructuring as a professional called to play a fundamental role in order for the same to reach a successful conclusion, although his appointment is only contemplated as mandatory in certain cases. Thirdly, in addition to current and imminent insolvency, a new budget goal is added for the initiation of a restructuring plan consisting of the probability of insolvency, which is considered to exist when it is objectively foreseeable that, if such a plan is not reached, the debtor will not be able to regularly meet its obligations maturing within the next two years. Fourthly, the deadline of the so-called "preconcurso" is extended, which is a mechanism that grants the debtor a period to negotiate with the creditors and achieve a restructuring plan that allows it to overcome its difficulties and avoid the status of insolvency. However, if a restructuring plan is not obtained in the aforementioned deadline , the business will have no choice but to apply for the declaration of insolvency. Fifthly, the instrument known in the forensic internship as "pre-pack concursal" is expressly regulated, which is an accelerated extrajudicial procedure of realization of productive units that allows to prepare their sale in the phase previous to the declaration of bankruptcy, with the appointment by the competent court to know of the same of an expert, whose function is to guarantee that the operation is developed in conditions of transparency, advertising and concurrence. Finally, a special procedure is foreseen for micro-companies, which is carried out in an abbreviated manner through standardized electronic forms accessible online and free of charge, which are sent telematically, eliminating all unnecessary procedures and reducing the participation of professionals and institutions to the minimum necessary. The entrance in force of this high school is relegated until the technological platforms necessary for its operation are developed. 

At final, as some industry specialists like to say, this reform implies a real "paradigm shift" of our insolvency and preinsolvency institutions. A change that will require a different approach to the phenomenon of insolvency and that will require an interdisciplinary specialization to develop the full potential of the new "toolbox" that the reform brings us to help restructure distressed but viable companies. Undoubtedly, this will be a great challenge before the autumn-winter that is looming on the horizon, with the expiration of ICO loans, the end of the insolvency moratorium, the rise in interest rates and the probable cut-off of Russian gas: the perfect storm?