Faced with this bleak picture, we must try to prevent the situation and minimize the damage as much as possible. It is common for the entrepreneur to have compromised his personal assets either because he acts as a self-employed person or because he has been forced to endorse the company's credits with his personal and family assets.It's over

In the event of (even occasional) liquidity problems, creditors' claims and consequent foreclosures can end up leading to a situation of business and personal economic bankruptcy.

To prevent this situation, bankruptcy legislation provides for some mechanisms that, when used properly, can prevent major evils.ar

Filing for bankruptcy is a legal obligation for any company or individual who is unable to meet its obligations on time. Apart from, but from this legal obligation, you have Bankruptcy mechanisms can help save businesses, businesses and wealth.

In anticipation of the expected severe economic crisis, l a Law 3/2020 postponed the obligation to submit a tender (to those who are under a legal obligation to do so for not being able to meet current maturities) that RDL 5/2021 has extended until December 31, 2021 . However, this temporary legal exception (cosmetic measure to make up for the effects of the crisis and try to alleviate the workload of the Commercial Courts) it does not solve the main problem. If the employer stops paying the debts that are due, the claims of creditors, both public and private, will begin, and foreclosures will begin to worsen the situation. (possibility of obtaining credit or better payment terms, etc.)

On the other hand, if the company has benefited from a force majeure ERTO in accordance with the exceptional regulations approved during the pandemic (with the obligation to maintain employment for six months from the resumption of activity), the presentation of the pre-competition will be necessary to be able to adjust the staff without incurring the risk of having to pay unsatisfied social contributions and possible associated sanctions.

If the insolvency situation persists and this renegotiation does not bear fruit, the bankruptcy must be filed. Although in Latin culture this is seen as a failure, the truth is that bankruptcy is without a doubt the best solution in case of insolvency. In addition to maintaining the legal prohibition of new executions or foreclosures and also stopping the accrual of new interest on overdue loans, the competition makes it easier to readjust the structure of the company or business. These include the possibility of selling a certain production unit or certain assets through the agile mechanism called pre-pack, as well as the possibility of processing employment regulation files in much more advantageous conditions than outside the competition ( see in more detail the article on the adoption of labor measures in bankruptcy on our website www.alonso-cuevillas.eu/laboral-concursal ), as well as the possibility of terminating certain contracts ( rentings, leasings, swaps , etc.) avoiding or reducing the penalties that generally involve these early resolutions.

If the company or business is viable with the corresponding restructurings, the aim is to reach a bankruptcy agreement with the creditors that allows to satisfy the pending debts with receipts and waits, that is to say, deferred in the time and reduced in the amount.

"The pre-tender stops the embargoes and allows you to have a certain amount of time to renegotiate the terms and conditions of the debts. A term that can be enough oxygen when it comes to a simple treasury problem due to lack of income during confinement.

If the company is not viable or the agreement cannot be reached, the liquidation will have to be carried out. In the case of companies, if things have been done well and the competition has not been submitted late (with respect to the legal deadlines), the competition will end without personal consequences for the employer. Otherwise, a possible culpable qualification of the competition could lead not only to the disqualification of the administrator but also, the condemnation to have to answer personally for the unpaid credits.

In the case of a natural person (self-employed or entrepreneur who has personally secured social debts), it may be advisable to resort to the second chance mechanism that allows you to obtain the benefit of exemption from unsatisfied liabilities (BEPI). If certain requirements are met, the BEPI definitively exempts the debts, thus allowing a second chance to start again (see in more detail the article on the second chance on our website www.alonso-cuevillas.eu/bepi ).

Bankruptcy Law is a transversal matter (legal, commercial, procedural, economic, accounting ...) and complex that, well applied, allows but very positive results (or, if preferred, to avoid very negative results). It is advisable, however, to put yourself in the hands of qualified and specialized professionals because, with the crisis, everyone will now be aiming to be a contestant.