What is it?

« The involuntary bankruptcy proceeding is the judicial procedure by means of which the debtor proceeds to the organized payment of the credits under the control of an external organ designated by the Court.”

Firstly, in order to understand why we are using this terminology, it is necessary to establish the meaning of:

• “Concurso”: Bankruptcy proceeding file by the debtor (voluntary) or on behalf of creditors (involuntary).
• Debtor: someone who owes money, or someone who is obligated to pay a debt.
• Common: community, group of people linked with common characteristics or interests.

Thus, it’s a procedure in which a group of people, with common characteristics (being the creditors of the same debtor), take part in a procedure with the aim of recovering their credits from the insolvent party.

Ideally, the debtor should solve his problems of insolvency by means of agreements with all his creditors out of the Court.

The need of transmitting this procedure to the Courts is due to the impossibility to reach agreements with all creditors and, especially, to the necessity of this procedure to be controlled by an external organ designated by the Court that defends the interests of the creditors, the Insolvency Trustee.

The involuntary bankruptcy proceeding is initiated by a legitimate creditor to whom the “"insolvent" company owes some credit that is totally or partially due.

The request of an involuntary bankruptcy is based on:

-Dismissal of the payments made by the debtor.
-Existence of seizure proceeding regarding pendant executions that affect to the debtor’s patrimony.