Decisions phase
Final solutions of the Insolvency proceedings under the Act are:
• Agreement.
• Liquidation.
They are alternative but it is possible to start an agreement and to end up in liquidation.
The agreement
This is the outcome which is preferred by the Act. There are two types of agreement:
1. Anticipated agreement proposal - which can be offered with the initial Lawsuit, when it s the insolvent company who initiates the proceedings.
2. Agreement proposal - where the procedure has not been initiated by the insolvent company, following the common phase, this company can propose an agreement to prevent the liquidation.
The Act regulates a whole procedure for the processing of the agreement to determine whether the liquidation of the company can be avoided by agreement. Many agreements represent significant remissions and long waits.
If there are more than one agreement, the creditors’ meeting is held for them to approve or reject the proposals.
Once the meeting has approved an agreement, a judicial approval of it is needed, even at this stage, the agreement can be opposed
Ultimately, the judge's subjective belief about the commercial viability of the agreement should determine that this is approved.
With the approval of the agreement, and even though the law considers it within the same stage of the proceedings, in practice, a new phase is opened: compliance of the agreement. Generally, the insolvent company itself will execute the agreement and will be reporting the execution to the Judge.
(Tomorrow: Liquidation)
Christmas in Compostela by Isidro Cea at Flickr.com
(98).jpg)