The daily Information of Alicante has published a story about business restructuring as a preventive alternative to bankruptcy. An article in which our office, MIguel López International Lawyers, offers the keys to the new scenario left by the end of the bankruptcy moratorium and the imminent entry into force of the reform of the law that governs these procedures. Before this situation, we recommend expert advice to companies to explore prevention and restructuring as alternatives to bankruptcy.
Lawyer Luis Francisco Perez Gomez, a partner at Miguel López International Lawyers, urges companies in an article in the newspaper Información to seek advice to maximize their viability: “Prevention is essential and even more so in this uncertain economic scenario. The bankruptcy reform adds the concept of probable insolvency, which is expected two years ahead and allows requesting a restructuring plan. These plans come to replace the current refinancing agreements, limiting the possibilities that there are now to block their approval.”
In the newspaper, Luis Francisco Pérez explains that with the end of the moratorium, a two-month period begins in July for companies in a situation of insolvency to request bankruptcy, “an obligation that, if not fulfilled, can entail serious responsibilities for its administrators. And the second main effect is that the courts will now be able to admit the necessary insolvency applications for processing, urged by a creditor of the insolvent company.”
The reform of the bankruptcy law is finalizing its processing and is expected to come into force at the end of July. In the opinion of our lawyer specializing in business advice, "it is not the ideal scenario to launch the application of such a far-reaching reform just when we expect an avalanche of latent bankruptcy applications during the moratorium, although it will always be better than continuing to apply the current law, which has been shown to be inefficient. An opinion that is reinforced with data: “The reality in its almost 20 years of application is that 90% of the companies in bankruptcy are liquidated. The main objective of the reform is to facilitate preventive restructuring as an alternative to bankruptcy, establishing a legal framework more in line with the European one”. For this reason, it emphasizes the need to promote the survival of companies with preventive actions.
The first recommendation for companies facing solvency problems is to resort to specialized advice, such as the one offered by the ML International Lawyers team. In the news of the daily Information, Luis Francisco Pérez explains that «there are alternatives to bankruptcy that must be analyzed individually: “If a company is not viable or has the possibility of refinancing, it must necessarily apply for bankruptcy. In case of financial stress, it would be convenient to communicate the start of negotiations with creditors. If an agreement is not reached in three months, there is a month to request the bankruptcy, although the bankruptcy reform provides for possible extensions. This period of negotiations has important effects, such as preventing judicial executions against the company with the exception of certain types of credit.”
It should also be noted that the new law will establish a special and simplified procedure for SMEs with less than 10 workers or with a turnover or liabilities of less than 2 million euros, through a series of forms and via direct electronic communication with the court. .
For any questions or request advice, contact our office and we will study your particular case.
