Claims for rescission of the debtor’s actions

Introduction

The rescissory actions are one of the practical consequences following the declaration of an insolvency proceeding. We have already briefly mentioned them in another post in which we talked about the effects on the administration and assets of the insolvent party. In summary, we recall that, after the declaration of the insolvency proceeding, the powers of the insolvent party are modified, requiring a duty of collaboration. In addition, there are also other effects on the creditors who have individual actions against the insolvent party. Specifically, declaratory proceedings and executions are affected, and the offsetting of credits and debts is also prohibited.

On the other hand, and with respect to contracts with reciprocal obligations and employment contracts, their continuity is allowed. The foregoing, without prejudice that the Insolvency Administrator or the insolvent party may request their termination in the interest of the insolvency proceeding.  And finally, we find ourselves with the acts detrimental to the active mass and the so-called reintegration or rescission actions. These are the actions we will focus on in this article.

Regulation and requirements of the rescissory claims of the debtor’s acts.

The rescissory remedies are regulated in Articles 226 and following of the Insolvency Law. (Former Article 71LC).

To raise a rescissory claim, it is necessary to carry out an act detrimental to the active mass. In the words of the jurisprudence, that it is an “unjustified patrimonial sacrifice” from the legitimate expectations of collection of its creditors. Also, that this act has been committed by the insolvent debtor. And finally, it must have been carried out within the two years prior to the date of the declaration of bankruptcy. The above will also be applicable regardless of whether or not there was fraudulent intent.

Presumptions on the concurrence of damage and its accreditation.

In addition to the above, the articles establish iuris et de iure (absolute) and iuris tantum (relative) presumptions of prejudice.

Thus, the economic prejudice is presumed, without admitting proof to the contrary, in the case of gratuitous acts of disposition. Except, the liberalities of use, payments or acts of extinction of obligations with maturity after the declaration of the bankruptcy. (Except in those cases in which there is a real guarantee). Taking into account that proof to the contrary is not admitted, is it necessary to substantiate the concurrence of a detriment? Who has to do it?

Well, from the wording of article 226 and the interpretation of the jurisprudence, truth is that it is not necessary to substantiate it. In the case of a gratuitous act of disposition, no proof of prejudice is required. Simply, the accreditation of the fact itself (an act detrimental to the active mass) and of the moment in which it took place will suffice. Since, if this occurs, an absolute maxim is established according to which the act is declared rescindable. And without proof to the contrary. Therefore, this rescission action may be requested by the Insolvency Administrator or creditor aware of the act detrimental to the active mass.

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The Objective Accumulation of Legal Actions

The objective accumulation of actions implies the filing of various claims by a plaintiff against a defendant

On the other hand, we have the iuris tantum or relative presumption. In this case, it is called relative because the damage is presumed, unless proven otherwise. For this, we must be faced with an act of disposition for valuable consideration in favor of a person especially related to the insolvent party. It also operates before acts of constitution of real guarantees in favor of pre-existing or new obligations contracted that replace them. And also, in payments or acts of extinction of obligations with maturity after the insolvency proceeding if they are secured by a real guarantee. Is it required here to prove the concurrence of damage? Well, neither, but there is a difference with the other absolute presumption. And it is that the defendant is allowed to prove that there has been no unjustified pecuniary sacrifice. However, this is a proof that corresponds to the defendant, in no case to the Insolvency Adiministrator or to the creditor who requests it.

What happens with the other acts of termination that are not subject to these presumptions?

It is possible that there are other acts that are detrimental to the assets of the insolvency Estate that are not subject to the presumptions mentioned above. In these cases, the case law has declared that it is up to the claimant to prove the concurrence of the damage. The mere generic mention of the detriment by one of the creditors or the AC is not sufficient. It is therefore necessary to prove the reduction of the bankrupt party’s assets. And that the available assets were not sufficient to satisfy the rights of the creditors, thus decreasing the effective possibility of collection.

The above, in order to avoid the ineffectiveness of any act of disposal of assets made two years before the insolvency proceeding. And that have entailed a variation in the composition of the passive mass.

How does case law interpret the concurrence of economic loss?

The commercial jurisprudence is opting for a broad interpretation of the concept of patrimonial loss, without limiting it to the patrimonial assets. Thus, including acts that involve a reduction of the assets without consideration of any kind. And also, those that damage the active mass at the same time that they reduce the liabilities. Provided that this entails an alteration of the par conditio creditorum. (Judgment No. 130/2015 of May 8 of the Provincial Court of Cáceres).

Other Judgments, add that there will be prejudice whenever there is an alteration of the collective satisfaction of the insolvency creditors. Even if this does not have a direct reflection in the debtor’s accounting situation.

Therefore, in conclusion, any decrease of the assets and the non-increase in it when this could have been occurred, will be detrimental. And in general, any result that prevents or hinders the collective satisfaction of the insolvency creditors. Even if the accounting situation, apparently, does not reflect such a decrease in assets. (Judgment no. 259/2017 of May 11 of the Provincial Court of Salamanca).

Conclusions

• The rescissory claims are one of the practical consequences of the insolvency proceedings.
• In order for it to arise, it is necessary  to perform  an act detrimental to the active mass. It must have been committed by the insolvent party. And committed within the two years prior to the date of the declaration of insolvency.
• The law establishes two presumptions of detriment to the assets. An absolute one, when the patrimonial damage is presumed, without admitting proof to the contrary. And another relative, when the patrimonial loss is presumed, unless the defendant proves the contrary.
• In addition to these presumptions, there may be other acts that may be detrimental to the assets of the insolvency proceedings. It is up to the plaintiff to prove the existence of the damage.
• The jurisprudence gives a very broad concept of patrimonial detriment. It covers any act that impedes or hinders the collective satisfaction of the insolvency creditors. Even if it is not reflected in the debtor’s accounting situation.

If this article has been of interest, we also suggest you to read the following article published on our website: The Express Bankruptcy Procedure.