Ministry of Economy: No More Legal Shield For Bankruptcy in 2015

1/04/2014 – El Confidencial

Undersecretary of Economy, Miguel Temboury, advises the companies that began arrangements with lenders to take maximum advantage of current Royal Decree that supports debt restructuring and refinancing. Therefore, he announced that 2014 will be the last year with the ´legal shield for bankruptcy´ in force.

The measures became valid in 2008 in order to prevent massive insolvency that seriously threatened whole sector. (…). The exception was supposed to be in force for two following years but it turned into a rule after five consecutive years of accounting exemption.

The department chaired by Luis de Guindos announced last year putting an end to the ´accountancy pardon´, however the suspension has been delayed due to lingering risk of the massive bankruptcy processes. (…).

The Royal Decree 4/2014 from 7th March establishes an exemption to compute annual accounts of tangible assets deterioration, real estate investments and the existence of loans and receivables to be collected. (…).

Instead of being used as ´an exceptional measure´, the law have been applied in situations other than entrepreneur troubles. (…) Luis de Guindos is working now on a regulation focused exclusively on the earliest stage of bankruptcy process that would facilitate debt restructuring and refinancing. However, the wheat must be separated from the chaff, meaning that viable companies must be distinguished from the irretrivable ones.

The ´accountancy bull´ is ought to be cancelled in Spain that aspires for recovering from the recession and in 2015 financial institutions must adjust and provide solvency to firms. The new economic cycle creates challenge and those not capable to face it must come to terms with consequences.



Original article: El Confidencial (José Antonio Navas)

Translation: AURA REE