Compulsory Bankrupcy Proceedings

Statement for Bankrupcy of a debtor

The Spanish Bankruptcy Act allows the creditor to file statement for bankruptcy of the debtor when some relevant evidences allow to conclude the existence of a situation of widespread insolvency. As proof of that insolvency the creditor will have to apply through the Court, for evidences like the financial statements, from which one can infer generalized defaults in payments.

The declaration of bankruptcy will depend on the policy of the judge according to the strength of the evidences. If the debtor is declared in bankruptcy on the basis of the instance of the creditor, 50% of its credit would be regarded as privileged.