The current crisis is hitting hard European and especially Spanish companies.
The number of insolvency proceedings has hit historical record numbers in 2011 in Spain.
In this context, an increasing number of international companies are receiving a letter from a so-called “administrador concursal” of their Spanish debtor gone into insolvency.
The “administrador concursal” is a lawyer or an accountant appointed by the Court, in charge to deal with the debtor’s business and to assist the Court during the insolvency proceeding.
In his/her letter, the “administrador concursal” informs the creditor that it has a brief delay (normally 15 to 30 days) to communicate the exact amount of its credit, usually by filling a standard form, accompanied by all relevant documents (invoices, etc.) in support of it.
The letter establishes an apparently simple procedure for the creditor, where the “administrador concursal” basically says: “just fill the form, tell me what the debtor owes you and send me all relevant documents”.
So, if you are a non-Spanish lawyer and your client asks you for advice as to what to do with regards to this letter, you would reasonably tell your client to do as the letter says, right?
Not really, as the letter usually lefts many important things unsaid.
Mainly, the letter does not say what happens next, that is, AFTER the creditor has sent the information. How may the creditor be able to follow-up on the answer sent? Will the creditor be informed as to what happened to its credit, (whether it has been recognized or not and how it will be paid)? Is the creditor aware of what can be done if, for whatever reason, its credit is not recognized? May the decision of the “administrador concursal” recognizing or not the credit be challenged? How?
Well, here is what happens “next”: with the information received from the creditors, the “administrador concursal” will prepare a report regarding the list of creditors, which will be handed to the Court. This list of creditors consists on the decision of the “administrador concursal” as to whether the credits should be recognized or not. This decision may be revised by the Court.
However, the Court will personally notify the report ONLY to the creditors who have formally appeared in the procedure. Therefore, the creditors who have limited themselves to fill the form sent by the “administrador concursal” without appearing in the procedure will NOT be personally notified of the report and run the risk of not even knowing that the report has been filed.
After the report has been filed and notified, the parties will only have TEN DAYS to challenge it. If the report is challenged, a contradictory procedure will start, ending with a Court’s decision about the recognition or not of the credit. If the parties do nothing, the decision of the “administrador concursal” regarding the list of creditors will be final.
Of course, from that on, the procedure will go even further, through different alternative scenarios.
The point is that many international creditors start their involvement in a possibly long and complex insolvency procedure, based on a simple letter that does not inform them sufficiently about what to do to defend their interests in the best possible way.
To avoid this problem, sometimes the best solution is not only to communicate the information, but also to appear in the procedure. This is the case, for example, when a controversy on the credit seems likely. On other occasions, a more informal follow-up, for example through direct contact with the “administrador concursal”, may be possible. Existing alternatives depend on the circumstances that need to be analyzed case by case.
The letter from the “administrador concursal” is just the beginning of a long procedure and that the strategy needs to be defined from day one. It’s important to avoid waking up one day and asking oneself: “what happened to the answer I gave to that letter?”
As a law firm specializing in insolvency and international commercial litigation, we would be happy to assist you in dealing with the most appropriate reaction in front of such a letter.
Héctor Sbert LAWANTS, Lawyers & Accountants, S.L.P. +34 93 255 31 35 – email@example.com