Despacho de Abogados en Alicante
What is a Receiver?
by Jose María Dutilh | Jul 27, 2017 | Business Law
What is a Receiver?
The Receiver is a figure used by the Spanish legal system as a guarantee for the control and protection of different economic rights, by exercising assistance or supervision functions in the management of said assets.
In what cases is a Receiver needed?
Beyond the support for the execution of credits, the Receiver has to be considered as an element for judicial assistance in criminal, civil, social or administrative channels, being a support in cases of liens or judicial auctions, whose executions have no guarantees of collections or are not very useful because they are uneconomical.
In certain circumstances, the debtor may choose the most appropriate option to pay off its debts, such as a lien of the company or a disposal of its assets, in order to avoid, where appropriate, the closure of the company.
1.1 Receiver in civil procedure (Law of Civil Procedure).
Two types of administration:
Judicial measure of lien guarantee (Arts. 630-633 LEC): in this case, it has assistance and monitoring functions as well as management to maintain the productivity of goods.
Administration for payment (Arts. 676-680 LEC): alternative means to execution to proceed directly to the satisfaction of the credit of the creditor.
1.2 Receiver in labour proceedings (Art. 256 LRJS)
It has a conservative purpose of the goods for the benefit of both the executor and the executed, since both are interested in the goods continuing to yield results and endure.
1.3 Receiver in criminal proceedings (arts. 601 and following LECrim)
Judicial administration can be agreed as:
Preventive measure in the execution of the pecuniary responsibilities derived from the crime (precautionary measure).
Preventive measure in the avoidance of criminal continuity (assurance of pecuniary responsibilities).
The aim of this figure is the deposit of goods susceptible of yielding results or income. In what is not foreseen in the penal legislation, the civil regulations are applied analogously.
It has to be distinguished from the court auditor, which refers to less intensive control work. Its function is to supervise the actions of the receiver, making the observations that it deems convenient if it does not agree with the actions of the receiver (art. 608 LECrim).
What are the assets subject to judicial administration?
In general terms, the assets subject to judicial administration are:
Public effects and securities admitted to trading on an official secondary market.
Encashable and non-encashable credits in the act.
Movable or semi-movable goods, including gold, silver or gemstones, as defined by Procedural Law.
Wages and pensions, as well as earnings and income of all kinds
Commercial or industrial establishments, which will include companies and their insolvency proceedings
What are the duties of the receiver?
Receivers are impartial professionals, independent of the parties. They are free to accept their charges and waive them. Their function cannot be delegated to another person. Among the most important functions are as follows:
Ensure results in legal proceedings, or guarantees for collections, which is the same.
Manage the assets of others assigned to their control and supervise the management thereof.
Serve as support to the work of the judge, being subject to instructions when appointed by him/her.
Support the creditor who has appointed him/her for ratification by the judge.
Render accounts of their actions to the judge.
Preserve all the assets that have been assigned to its control.
The receiver shall also inform each party of its activities and its acts shall be public at all times.
Receivers usually control the directors of the companies, sometimes able to fulfil management functions of the company
Benefits of receivers
For parties in litigation, some of the advantages of designating a receiver are:
They help build inventories on inheritances that are in litigation and administer them.
They replace debtors when their assets have been suspended.
Their reporting function is very practical for the judge, since it allows him/her to know the state of the economic recovery of the company in fulfilment of Second Chance Act.
Because they belong to their associations, receivers enjoy continuous training, which improves the quality and effectiveness of their work.
They assist the parties in determining the payment agreements or deferrals requested.
They have civil liability insurance, which guarantees compensations for cases in which they cause patrimonial imbalances.
Access to information on subsidies and aid that can benefit the claimants subject to its control.
They have means of arbitration foreseen in the organisations of the professional associations to which they are assigned.
Receivers represent a fundamental, impartial and professional support to the parties in litigation about open economic causes in rights and property duties.
Insolvency Administrator (article 26 and ss Insolvency Law)
The insolvency administrator is the figure who, within an insolvency of creditors, performs supervision or substitution functions of the management body of the company in insolvency. The insolvency administrator acts, in turn, under judicial supervision, although it has some autonomy to perform its functions, among which are:
Create an asset and liability report of the insolvency, as well as the agreement proposals presented.
Perform intervention and supervision functions of the patrimonial powers of the debtor (in the case of voluntary insolvency).
Replace the debtor in the administration and disposition of the assets (assumptions of necessary insolvency.
The Insolvency Administrator’s position is voluntary (the appointment must be accepted) and is remunerated according to a fee.
Finally, in the performance of its functions, the insolvency administrator is subject to a strict liability system, against the debtor and against the creditors, of the damages and damages caused to the overall assets for acts and omissions contrary to the law or performed without due diligence (article 36 LC).1
Jose María Dutilh
Jose María Dutilh