In judicial recovery and bankruptcy proceedings, a judicial administrator is appointed to represent the insolvent company, and a creditors’ committee can be constituted to represent the creditors. Their respective duties depend on the nature of the proceedings, as follows:
Judicial recovery and bankruptcy
The judicial administrator is responsible for a wide array of administrative tasks. These include sending correspondence to the creditors as listed in Article 51, Article 99 and Article 105, communicating the date of request for the judicial recovery and the declaration of bankruptcy, provide all information requested by the interested creditors, extracts from the debtor’s books or information requested by the creditors, debtors or administrators. The judicial administrator must also prepare a list of creditors as referred to in § 2 of Article 7, consolidate the general picture of creditors under the terms of Article 18 and request the judge to convene a general meeting of creditors in the case, when it deems it necessary for its hearing to make decisions, and hire professionals or specialised companies to assist in the exercise of their functions and to manifest themselves in the cases provided for in the law.
The judicial administrator is responsible for supervising the debtor’s activities and compliance with the judicial recovery plan, applying for bankruptcy in the event of failure to comply with the obligation assumed in the recovery plan, submitting, together with a case file, a monthly report and case file on the debtor’s activities, and reporting on the execution of the recovery plan. If the debtor fails to comply with its obligations assumed in the recovery plan, the judicial administrator should apply for its bankruptcy.
The judicial administrator has a large list of duties under bankruptcy proceedings including the following:
- notify the official body of the time and place where creditors may access the books and documents of the bankrupted party
- examine the debtor’s bookkeeping
- assume judicial representation of the bankrupt estate and report on proceedings
- receive and open correspondence addressed to the debtor
- present a report on the causes and circumstances that led to the bankruptcy, indicating potential civil and criminal liability of those involved
- recover debtor’s assets and documents
- evaluate recovered assets
- hire appraisers to value the assets;
- liquidate the assets and make payments to creditors
- request the judge to pre-sell perishable items or those at risk or expensive to conserve
- preserve the bankrupt party’s rights and take action to collect debts;
- represent the bankrupt estate in court
- render accounts at the end of the process.
The creditors’ committee’s duties include the following:
Judicial recovery and bankruptcy
- supervise the activities and examine the accounts of the judicial administrator
- ensure the smooth running of the proceedings and compliance with the law
- notify the judge if it identifies any violation of the rights or damage to the interests of the creditors
- investigate and issue an opinion on any stakeholder complaints
- request the judge to convene the general meeting of creditors.
- supervise and report on the administration of the debtor’s activities
- supervise the execution of the judicial recovery plan
- in certain cases where the debtor is removed from management of its business, submit for the judge’s approval the sale of permanent assets, the constitution of guarantees and other security and the creation of indebtedness necessary for the continuation of business activity during the period prior to the approval of the judicial recovery plan.