One of the most notable new features of the new Insolvency Act is the introduction of a new auxiliary figure: the restructuring expert. In this article we review their functions and the appointment process.
Functions
The first thing to know is what are the functions of this new figure who is now involved in insolvency proceedings. The restructuring expert acts as a mediator who promotes negotiation between the parties. He also helps inexperienced debtors and facilitates judicial decisions when disputes arise between the parties. In addition, in the case of non-consensual plans, he prepares a report on the going value of the company.
How the restructuring expert is appointed
Articles 672, 673, 676 and 678 of the Insolvency Act provide that the restructuring expert in insolvency or preinsolvency proceedings is appointed by the judge. He may only do so in two cases:
- When requested by the debtor or a majority of the creditors.
- Autonomously, when it deems it necessary to safeguard the interests of creditors or when judicial approval is sought for a restructuring plan that has effects on third parties who have not voted in favour of it.
Tasks of the restructuring expert
Among his or her knowledge, skills and abilities, the restructuring expert must be able to detect the warning signs of early insolvency. In this regard, we cannot forget that the Insolvency Act transposes Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019, the fundamental objective of which is to offer bankruptcy prevention or early warning services.
In order to increase the efficiency of restructuring, insolvency and debt discharge procedures, the expert must be able to predict difficulties, restructure the organisation pre-emptively and adapt it to the market. To this end, some of his main concrete tasks are to analyse the company’s financial situation and financial statements and to draw up viability plans and growth strategies. He also implements financial solutions, restructuring and continuity measures. He evaluates compliance programmes and implements risk control systems. Finally, it advises on early warning systems, such as foreclosure and insolvency proceedings.
Skills of the restructuring expert
In order to carry out all these tasks effectively, the restructuring material expert must have specialised legal, financial and business knowledge, such as:
- The rules applicable to each specific case of insolvency proceedings.
- Early warning and early intervention.
- The duties of organisational.
- Risk control.
- Compliance programmes.
- The execution of a financial analysis.
- The implementation of a feasibility plan.
- The valuation of organisations.
- What is restructuring or refinancing and what does it consist of.
- The implementation of possible financial solutions.
- The implementation of growth strategies.
What is the profile of the restructuring expert?
According to Article 674 of the new Insolvency Law, the restructuring expert must be a «natural or legal person, Spanish or foreign, who has specialised legal, financial and business knowledge and experience in restructuring matters or who proves that he or she meets the requirements to be an insolvency administrator in accordance with this law».
In practice, this means that the restructuring expert becomes a profession. No qualification or compulsory registration is required to practise this profession. However, this new insolvency law will require qualified professionals and experts in insolvency proceedings.
At Confianz we have extensive experience in insolvency law. Do not hesitate to contact us if you have any questions on this subject.