This has undoubtedly been the case in Spain in recent years. Not long after the entry into force of the new Insolvency Law (September 2004), it was soon obvious that it would not be efficient enough, nor would it make a significant contribution to the actual practice.
An insolvency proceeding (concurso de acreedores) was not as helpful as expected when trying to achieve the objectives sought when drafting the law. It was quickly acknowledged that making an insolvency order against a company often entailed prejudicial effects on its business, leading to the loss of value of its assets and almost always ending in the liquidation of the operations.
It was ultimately confirmed that the Insolvency Law placed much greater mphasis on scrupulously respecting creditors’ procedural rights and safeguards than on identifying where the value lay and the most suitable way to preserve that value or, where appropriate, realise the value to the benefit of the creditors.
Read full article