What is bankruptcy?

The bankruptcy is a judicial process regulated by Law 22/2003 or also called bankruptcy law. When a natural or legal person voluntarily requests or enters a bankruptcy, it is because their financial situation has become a insolvency economic that prevents you from facing your debts.

Characteristics of a bankruptcy

These are some of the characteristics that define a bankruptcy:

Voluntary or necessary

The bankruptcy can be requested voluntarily by the interested party, but also at the request of one of the creditors the necessary bankruptcy can be declared through a judicial procedure.

Temporary insolvency or unviable business

The bankruptcy is presented in two situations: a temporary insolvency, in which case the / person may be viable, or in situations where the company is not economically viable as configured. In these cases it is more difficult to recover from insolvency.

Insolvency administrator

In bankruptcy proceedings, a bankruptcy administrator is appointed. This person is in charge of collecting all the economic data and evaluating the viability and possible solutions to the insolvency situation.

Debt recognition

The bankruptcy supposes an immediate recognition of the debts of the interested party.

Settlement, removal and fractionation

Some of the measures that are carried out in the contest creditors are debt settlement, remove or the fractionation of the same, in order to recover the economic solvency.

Guilty or not guilty

After the intervention of the bankruptcy administrator, the bankruptcy will be resolved for the debtor with two possible results:

  • Guilty, in which case it is considered that the administrator of the company or individual has not acted with the good faith necessary to avoid the situation of insolvency.
  • Not guilty, in which case it is considered that the bankruptcy arises from a situation outside the company itself.

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