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Creditors Contest: Sort to survive

What to do when music stops? That is the question that in recent years, many entrepreneurs and administration tips have

What to do when music stops? That is the question that in recent years, many entrepreneurs and administration tips have been made in our country, either because of the impact of the crisis on consumption, in the difficulty of external financing -a bank -object -, of The fall of an entire supersector of economic activity such as real estate, or direct .

sometimes it happens to stop. Sit and look around the company’s situation. Make an initial scan and see what happened exactly. The normal thing is that an economic report be made in which exactly about 6W of the case are explained. When you have, it can happen that the situation is so unsustainable in financial matters that the company can no longer pay its debts. The figure of the creditors contest appears then the guide that indicates the road.

The creditors contest is a resource that companies have when they financially enter into crisis and can no longer deal with the debts/payments. This contest is voluntary when the owners of the companies and forced when one or several creditors request it.

The main objective of the creditors contest lies in ordering the company and studying all the possibilities to guarantee its survival.

The creditors contest usually benefits the affected business group and the two most important advantages of the same are that it allows the group to be operated normally and allows the management team to continue leading the company, at the same time that the deadlines are flexible and the conditions under which the company must return its debt.

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To take the company’s reins during the contest, a judge appoints the bankruptcy administrators. In addition, three administrators are usually appointed, usually a lawyer, an economist and the creditors representative.

Depending on the health status of each company, the same time or another, but normally administrators usually take a report on the company’s situation between 2 and 3 months. After this, it is time to decide whether the company is settled, when it has no solution, or if an agreement is established to carry it forward.

This agreement includes a viability plan and a payment plan. It is very common for banks to accept debt reductions up to 50%. Another advantage after declaring the contest is that judicial or extrajudicial executions cannot initiate, nor are tax or administrative constraints against the assets of the company requesting the contest. Finally, in case of success, the first to collect are the employees, then the public administrators, the financial entities and finally the suppliers are followed.

They are delicate situations to be faced with total guarantees, whether it is in the insolvent part, that is, the affected actively, as if it is in the passive affected part (creditor, worker). Several members of our team have experience in advising these types of situations, in which an absolute domain of legislation, business, economic and financial foundations is required. In other words: be the reference lighthouse.

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