What is an express contest?

Express contest

The express bankruptcy is a form of bankruptcy that is articulated in bankruptcy legislation for companies in a situation of insolvency that lack sufficient assets to be able to satisfy, not even, the credits against the mass. In other words, for companies that do not have assets of any kind to liquidate or do not have assets. In these cases, the Judge can establish in the same order the declaration of bankruptcy and decree the conclusion of the same.

Through this mechanism, it is avoided carrying out a judicial procedure made up of different phases (common phase, agreement phase or liquidation phase), which It would not make sense for those companies whose assets do not even cover the costs of the bankruptcy, such as the costs of bankruptcy administration or lawyers’ fees, among others.

Although it is a procedure normally addressed to legal persons, the law also provides that natural persons make use of this type of bankruptcy. In the event that the bankrupt is a natural person, the Judge will appoint a bankruptcy administrator who will be in charge of liquidating the existing assets and paying the credits against the estate in the established order.

After completing the liquidation, the bankrupt may request the exoneration of the unsatisfied liability before the Judge, the processing and effects being applicable (Read article: Cancellation of debts through the Second Chance Law), as well as the requirements (Read article: Requirements to access the Second Chance Law ) established in the Second Chance Law.

It may interest you:”Insolvency in individuals and self-employed. The second chance law”

What requirements are necessary to apply for the express contest?

La Ley 22/2003, Concursal, en concreto, su artículo 176 bis establece la posibilidad de concluir el concurso de acreedores debido a la insuficiencia de masa activa en el mismo auto de declaración de concurso cuando:

What requirements are necessary to apply for the express contest?

The < a href="https://www.boe.es/buscar/act.php?id=BOE-A-2003-13813" target="_blank" rel="nofollow noopener noreferrer">Law 22/2003, Bankruptcy< /a>, specifically, its article 176 bis establishes the possibility of ending the bankruptcy due to insufficient active mass in the same order of declaration of bankruptcy when:

• The Judge clearly appreciates that the assets of the bankrupt, presumably, will not be enough to satisfy the foreseeable credits against the mass of the procedure.
• The exercise of reintegration, challenge or third-party liability actions is not foreseeable.

The order, in addition to declaring and concluding the bankruptcy, will agree to the extinction of the company, ordering the cancellation of its registration in the corresponding public records, for this reason, an order will be issued containing testimony of the order.

For its part, the Royal Legislative Decree 1/2020, which approves the consolidated text of the Bankruptcy Law and which will enter into force on September 1, also provides for its articulated the express quiz.

How is the express contest processed?

Any company that is insolvent and has the obligation to request bankruptcy may opt for the express bankruptcy. The bankruptcy will have to be presented before the corresponding commercial court and the Judge of the same will be in charge of deciding whether, in view of the information provided by the debtor, it is appropriate to activate the exceptional procedure of the express bankruptcy. Once this bankruptcy modality is activated, a bankruptcy administrator will not even be appointed, extinguishing the company immediately with the order issued by the court.

It should be noted that, to opt for this bankruptcy modality the good faith of the company administrators is necessary, since in the event that If the bankruptcy judge detects irregularities in the same due to a lack of diligence in the functions of its administrators, it could deny the request and urge reinstatement, challenge or third-party liability actions. In other words, for the Judge to admit the bankruptcy as an express bankruptcy, he does not have to suspect about the diligence in conducting the business or about the possible aggravation of the insolvency situation by its administrators.

Conclusion

In conclusion, we are going to highlight the main advantages of the express contest:

• The fastest and most agile processing time for this type of procedure, since in the same order of opening of the contest, the conclusion of the same will be dictated.
• The cost of the bankruptcy will be lower, since, among other things, the company saves the cost of bankruptcy administration.
• The extinction of the company, in parallel, the judge will request the cancellation of the inscriptions of the company in the public records, or what is the same, the closing of the registration sheet.