The expression Pre-bankruptcy law is used to refer to the set of legal rules that aim to prevent bankruptcy and/or the insolvency of the debtor. It differs from bankruptcy law in that it regulates bankruptcy proceedings while pre-bankruptcy law seeks alternative solutions to bankruptcy. At the same time, opting for a pre-bankruptcy measure allows the debtor to avoid his duty to declare bankruptcy, even if his economic and financial difficulties already constitute current insolvency.

When the solutions offered by pre-bankruptcy law are not sufficient, bankruptcy must be opened with different consequences depending on the pre-bankruptcy institute chosen.

Avoiding the declaration of bankruptcy can be positive for both the creditor and the debtor. For the debtor, the bankruptcy implies an intervention or suspension in the powers of administration and disposal of their assets, which may not favor the conservation of the professional or business activity carried out. On the other hand, for the creditor they can be a safe and quick way to guarantee collection.

Contenido

La legislación ofrece dos institutos diseñados como alternativa del concurso: los acuerdos extrajudiciales de pagos y los acuerdos de refinanciación.

1. Extrajudicial payment agreements

Also called bankruptcy mediation, it consists of extra-bankruptcy agreements made between the debtor and some of its creditors, the achievement of which is entrusted to a bankruptcy mediator. Legally it is reserved for natural persons, entrepreneurs and SMEs.

If this is not successful, bankruptcy proceedings are opened with the only possibility of concluding it with liquidation.

2. Refinancing agreements

It consists of extra-bankruptcy agreements between the debtor and some of its creditors in which the intervention of the mediator is not required, but in certain cases judicial approval is required. Used sociologically and economically by large companies. They are generally proposals made by financial entities that seek to modify their debtor's payment conditions so that they can presumably comply with their obligations.

If it is not successful, the bankruptcy proceedings are opened, leaving both the means of agreement and liquidation open for its conclusion.