New system to appoint bankruptcy receivers
Published on 7th Jan 2015
Law 17/2014, of 30 September, which adopts urgent measures concerning the refinancing and restructuring of corporate debt, includes, among its modifications, the steps to appoint a bankrutpcy receiver.
As specified in the second transitory provision, new articles 27, 34 and 198 of the Act on Insolvency (the “AI“) shall not enter into force until April 2015, when the regulatory implementation is expected to come into effect. However, it is worth analysing the new criteria that shall be used in the appointment of bankruptcy receivers.
Firstly, current article 27 of the AI specifies that only legal or physical individuals included in section four of the Public Bankruptcy Registry may be appointed. These individuals should also declare their availability to carry out any tasks related to managing bankruptcy processes within the jurisdiction of the Commercial Court appointed to each bankruptcy process. In any case, and taking into account any requirements, the content included in the regulatory implementation should be followed, although the AI sets out that any “specific requirements could be mandatory in order to become a bankruptcy receiver in medium or large sized bankruptcy proceedings”.
The future regulatory development of the AI should set out the difference between small, medium and large bankruptcy proceedings. This is one of the main concerns for judicial operators because it is particularly difficult to predict the size of a bankruptcy by just requesting bankruptcy proceedings. The scenarios resulting from bankruptcy proceedings are many and varied so deciding, ab initio, if it will be a small, medium or large process is rather rushed.
Secondly, it is important to highlight the development that the lawmaker has included regarding the remuneration of the receiver in bankruptcy. In this respect, with the new wording of article 34 of the AI, the legally approved fees shall be applied and any remuneration shall be subject to the rules of exclusivity, limitation, effectiveness and efficiency. Likewise, the initially fixed remuneration may be cut by the Commercial Judge following the bankruptcy process. However, any cuts should be the result of the receiver’s non-compliance, delay or lack of quality in their work.
Overall, and taking into account the current economic and social context, we can state that the regulatory development expected for April this year shall be of great significance for bankruptcy regulations and it shall, therefore, affect the course and development of all bankruptcy proceedings.