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Insolvency law provides for the possibility for a creditor to request the declaration of insolvency (insolvency proceedings) of a company against which it has an unsatisfied claim.

It should be specified that a creditor who, within the six months prior to the lodging of the application, has acquired the claim by inter vivos acts and on an individual basis, after its maturity, does not have standing.

The creditor requesting the declaration of insolvency must state in the application the origin, nature, amount, dates of acquisition and maturity and the current situation of the claim, accompanied by supporting document(s), as well as the external fact(s) revealing the state of insolvency from among those listed in the law.

The Law establishes that the application for a declaration of insolvency filed by any creditor must be based on one of the following external facts revealing the state of insolvency:

  1. The existence of a previous judicial or administrative declaration of insolvency of the debtor, provided that it is final.
  2. The existence of a title for which a writ of execution or constraint has been issued without the seizure having resulted in known free assets sufficient for payment.
  3. The existence of liens for executions in progress that affect the debtor’s assets in a general manner.
  4. Widespread failure to pay the debtor’s current obligations.
  5. General default in the payment of tax obligations during the three months prior to the application for insolvency proceedings; payment of social security contributions and other jointly collected items during the same period, or payment of salaries and compensation to workers and other remuneration derived from employment relationships corresponding to the last three-monthly payments.
  6. The hasty or ruinous liquidation of its assets by the debtor.

In the event that several creditors request the insolvency proceedings of the same debtor, the law provides that once the application has been admitted for processing, those that are filed subsequently will be accumulated with the application first distributed and will be joined to the proceedings, with the new applicants being deemed to have appeared without the proceedings being taken back.

In addition, any precautionary measures deemed necessary to ensure the integrity of the debtor’s assets may be requested. However, the judge may ask the applicant to provide security for any damages that the precautionary measures may cause to the debtor if the application for the declaration of insolvency proceedings is finally rejected.

Do you need advice? Access our area related to the application for bankruptcy of a company at the request of one of its creditors:

Insolvency and Liquidation Proceedings – Devesa

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