Unfortunately, the Covid-19 pandemic has left us with a social and economic crisis that has resulted in many of our country’s companies being or will be declared bankrupt. When this happens, outsiders to the legal world may feel bewildered when they hear words such as creditor, insolvency law, insolvency administrator, insolvency credit, credit against the mass, accrual, and a long etcetera. That is what we are going to talk about in this article, to give you the keys to understand it better.
When it is known that a company has been declared bankrupt, the questions that most concern companies and/or people who work with them are: Will I collect the invoices I have issued? Why are my invoices not paid on time? Why are payments being made and not mine? Can I continue working with that company with the certainty of being paid for the services I provide?
To answer all these questions, we must take into consideration that when a company is declared bankrupt – which occurs when the Commercial Court dictates the bankruptcy declaration -, we must imagine a parenthesis in the life of the company in which all its actions will be governed by the Bankruptcy Law (Royal Legislative Decree 1/2020, of 5 May).
In this sense, all the credits that have accrued prior to the declaration of insolvency proceedings will be considered as insolvency credits, which means that their payment will be paralysed, and the creditor will have to communicate his credit to the Insolvency Administration appointed. At this point, several doubts may arise:
How will I know that a company with I work has been declared bankrupt? The Insolvency Administration will communicate the declaration of insolvency to all creditors whose identity, address and e-mail address appear in the documentation provided by the insolvent company.
What happens if I do not receive this communication? It is possible that the documentation provided by the insolvent company does not include the address of any of the creditors. In this case, I will be able to find out that a company has been declared insolvent through the BOE (Official State Gazette), where the Order declaring insolvency will be published.
Do I have to notify the Insolvency Administration of my credit? Yes, within one month of the publication in the BOE of the Order of declaration of insolvency, all creditors must notify their credit to the e-mail address provided by the Insolvency Administration.
How can I find out if my credit is an insolvency claim? The standard used to classify a credit as insolvency or against the mass is the accrual. Therefore, it must be taken into consideration when the service has been provided, regardless of its maturity: if this service has been provided prior to the declaration of insolvency proceedings, we are talking about an insolvency claim, whereas if the service has been provided after the declaration of insolvency proceedings, it will be a claim against the insolvency estate.
What is the relevance of my credit being classified as bankruptcy or against the mass? Insolvency claims cannot be paid on its expiration but will be recognised in the list of creditors drawn up by the Insolvency Administration, whereas claims against the bulk will be paid on their respective maturities.
So, answering the questions with we began this article:
Will I collect my credit? If we are talking about an insolvency claim, its payment will depend on whether the insolvent company manages to approve an agreement, in which case, its payment will be subject to the provisions of the agreement, or whether it goes into liquidation, in which case all the claims will be paid in proportion with the money that may be obtained from the sale of the company’s assets.
Why are my invoices not paid when due? Probably because these invoices have been classified as insolvency claims and, therefore, their payment has been paralysed by the declaration of insolvency itself.
Why are payments being made and not mine? Because the payments that are being made correspond to credits qualified against the bulk, after the declaration of insolvency, which are paid on their respective due dates.
Can I continue working with that company with the certainty of being paid for the services I provide? Yes, although the payment of invoices accrued prior to the declaration of insolvency proceedings is paralysed, the Insolvency Administration will ensure that those accrued after the declaration of insolvency proceedings were paid on their due date, given that they will be considered as claims against the bulk.
Cristina Dominguez Esteve – Lawyer – Figueras Legal