Iratxe Osinaga Garate
Let me begin by thanking European Dialogues for organizing a truly revelatory talk last Thursday [April 23] at the San Telmo Museum of Donostia-San Sebastian featuring the federal Judge Elizabeth S. Stong. The question we asked was whether it is possible to apply the measures employed in the United States to fight the crisis in the European Union. This in turn led me to another question, perhaps one even more philosophical: is it possible to humanize bankruptcy proceedings?
Under the current legislation governing insolvency proceedings, [Spanish] Law 22/2003 of July 9, the insolvent debtor (of natural or legal personality), is not only in a state of inability to regularly meet its obligations, but also the debtor’s capacity is restricted, and depending on the kind of insolvency proceedings, either because of intervention or replacement of the debtor’s administration powers by the insolvency administrators.
Creditors in turn are forced to submit claims to the insolvency administrators to be part of the insolvency estate and to satisfy their claims. Both the creditors and the debtor are involved in a process with little hope of recovering what they have lost or keep what little they have: the assets of the debtor and the amounts owed to the creditor. With this conduct of insolvency proceedings, no one can honestly say to the parties that they will “do their best to make sure everyone wins”. It is difficult to expect that a positive attitude will mark such a bankruptcy proceeding.
Do not forget, moreover, that debtors and creditors, although they appear as natural or legal persons in bankruptcy proceedings, they are insolvent persons who for various reasons cannot meet their obligations. In my point of view, in the absence of fraud, everyone deserves a second chance to recalibrate the situation.
As Judge Elizabeth S. Stong said, “the Court (which handles insolvency proceedings) is a place for a second chance. Nobody wins or loses.” I wonder if that philosophy is followed in the commercial courts [in Spain] where insolvency proceedings are held. I wonder if one might consider humanizing bankruptcy proceedings so as to encourage the parties and help them to reach a solution in which nobody loses or wins at the expense of others, and once the process is finalized, to congratulate them and wish them luck…
To be clear, this involves finding a dignified solution for someone who has lost everything, or almost everything, and helping them to get second chance. We must not forget that the Spanish Constitution in Article 10 provides that, ” The dignity of the person, the inviolable rights which are inherent, the free development of the personality, the respect for the law and for the rights of others are the foundation of political order and social peace.”
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