Luis Prados Ramos



In previous entries we have dealt with the procedure of the second chance law whose ultimate goal, with the legally established requirements, is to get debtors (individuals) who cannot pay their debts, to be released from them.

This power of what, in legal terms, is called exoneration of the unsatisfied liability, corresponds to the judges.

We are not going to deny that it is a complex procedure, since there are many problems that arise in relation to it.

In this entry we are going to refer to three issues, which I think it is important to disclose, and to some extent make some critical comment, but not before referring, as a starting point to the requirements for the exoneration of unsatisfied liabilities.


The requirements to obtain the benefit of the exoneration of the unsatisfied liability are contemplated in article 178 bis of the Bankruptcy Law, having to indicate, as a budget, that it can only take place, once the contest has concluded by liquidation (not a very frequent assumption in the cases of people who use this file) or due to insufficient active mass, which means that all the goods and rights that according to the  article 76 LC  they were part of the active mass, they have been made and applied to the payment of the credits, that is to say that there are no goods with which to pay the creditors.

Once this budget has been met, the requirements established in the aforementioned article 178 bis of the Bankruptcy Law, in order to obtain the benefit of the exoneration of the unsatisfied liability, are that the debtor complies with the requirements contained in ordinals 1, 2 and 3 of section 3, that is, say:

1º.- That the bankruptcy has not been classified as guilty;

2º.- That the insolvent debtor has not been convicted by final judgment for certain property crimes;

3º.- and the out-of-court payment agreement procedure has been used prior to the opening of the contest or that the 25% of the ordinary credits have been paid

And, furthermore, depending on the alternative that is taken, immediate exoneration of the ordinal 4th or exemption in five years of the 5th ordinal, other requirements specific to each alternative must be met. So:

The immediate exoneration, requires that the credits against the mass and the privileged bankruptcy credits have been fully satisfied and, if an out-of-court payment agreement had not been attempted, at least 25 percent of the amount of the ordinary bankruptcy credits

And the provisional exemption that agrees to submit to the payment plan, under the terms provided in paragraph 6 of article 178 bis of the Bankruptcy Law.

We will return to these issues later.


Second chance files that have a notarial relationship are those in which the debtor is not a businessman, as indicated in article 242 Bis of the Bankruptcy Law, and seeks a payment agreement with his creditors, since in these cases it is the notary who should promote the negotiations between the debtor and his creditors, being able to designate, if he deems it appropriate or the debtor requests it, a bankruptcy mediator.

We are not going to deny that the fact that it is the Notary who promotes the negotiations is a matter of very little application.

I know of some colleagues who have done it and I personally, in some cases, and almost out of friendship with the lawyers who handled the proceedings, have acted as a mediator, and with some pride I can say that I have reached agreements, or have been close to it.

The normal thing is that the Notary Public proceeds to the appointment of a bankruptcy mediator, in accordance with the procedure established by the instruction of February 5, 2018, of the General Directorate of Registries and Notaries, on the appointment of a bankruptcy mediator and communication of data to the bankruptcy portal for an out-of-court payment agreement.

In practice, however, it was frequently the case that no mediator was found to accept the position and, as the aforementioned instruction was worded, it left the notary condemned to indefinitely repeat the appointments. I know of colleagues who had made more than thirty attempts.

As a way to overcome these anomalies, different alternatives were proposed:

a.- That the Notary, after the two-month period has elapsed without having been able to appoint a bankruptcy mediator due to lack of acceptance by the mediator, close the file, delivering a copy to the debtor so that he can file a consecutive bankruptcy if he so wishes;

b.- That the Notary public, upon receiving the debtor's request to file the file, limit the number of attempts that will be made to appoint a mediator so that, in the event that none of them accept, the file is also terminated;

c.- Or that, after a series of unsuccessful attempts, the Notary could allow any mediator who wants to accept the position to do so even if they do not follow the sequential system regulated by art. 233 of the LC.

Fortunately, the General Directorate of Registries and Notaries has shed some light on this issue, which, in response to the query made by the Board of Directors of the Illustrious Notarial College of Madrid, regarding the manner in which Notaries must proceed in the cases in which, applying the sequential system provided for in art. 233.1 of the LC, no designated bankruptcy mediator accepts the position to intervene in the bankruptcy of the non-entrepreneurial person debtor, has indicated, following the criteria of the Judgment number 14/2019 of the Provincial Court of Valladolid, and the Orders numbers 188/ 2018 and 12/2019 of the Provincial Court of Barcelona, number 231/2018 of the Provincial Court of Tarragona and number 31/2019 of the Provincial Court of Lleida, which:

once tried naming without obtaining the acceptance of a mediator during the period of two months established by law to try to reach an agreement, the agreement must be considered for all intents and purposes without prejudice to the debtor, since the non-acceptance of the mediators in accordance with the system of article 233 of the Bankruptcy Law is a circumstance totally beyond their will and control, the debtor complying with the prerequisite for the bankruptcy due to the fact of having filed the file before the Notary, this being the Jurisprudential line of the aforementioned resolutionss.


Article 238 of the Bankruptcy Law states that for the out-of-court payment agreement to be considered accepted, the following majorities will be necessary, calculated on the totality of the liabilities that may be affected by the agreement:

to) If he had voted in favor of it, 60 percent of the liabilities that could be affected by the out-of-court payment agreement, creditors whose credits do not enjoy real guarantee or for the part of the credits that exceeds the value of the real guarantee, will be subject to waiting, whether for principal, interest or of any other amount owed, with a term of no more than five years, with reductions of no more than 25 percent of the amount of the credits, or the conversion of debt into participatory loans during the same term.

b) If he had voted in favor of it, 75 percent of the liabilities that could be affected by the out-of-court payment agreement, the creditors whose credits do not enjoy real guarantee or by the part of the credits that exceeds the value of the real guarantee, they will be subject to waiting for a period of five years or more, but in no case more than ten, to reductions of more than 25 percent of the amount of the credits, and the other measures provided for in article 236.

The aforementioned article allows waiting periods of up to 10 years and removals, greater than 25% of the liability but without setting a maximum limit, which raises the question if it is possible to remove the 100%.

In the reality of these procedures, on many occasions it is not possible to offer anything, since the debtors already have nothing. A lawyer friend, raised the possibility of stating that the debtor enjoyed help from a relative, in a certain amount, which would be used to pay the debt, as long as the creditors accepted the exoneration of the rest of the liabilities.

In my experience, and when I have been asked questions on this matter, I have always expressed that something had to be offered, even if it was little, at least a mere postponement, and that the file cannot be limited to directly requesting the exoneration of liabilities.

On this matter of the limits of the out-of-court payment agreement, the Supreme Court has had the opportunity to rule, in a judgment of March 13, 2019, which, in response to a proposal for a reduction of 100%, without agreement and with a request for consecutive bankruptcy, states that "There was no real attempt to reach an out-of-court payment agreement, since the proposal contained a reduction of 100% from the amount of the credits".

And the Supreme Court concludes by saying that, if "as in the present case, in practice nothing is offered, since the proposal was the extinction or removal of the 100% from the credits, we must conclude, as the Court did, that an out-of-court payment agreement had been attempted”.

For this reason, the debtor cannot obtain “the benefit of the exemption of the unsatisfied liability by the alternative of ordinal 4 of art. 178 bis 3 LC, without having previously proven that they have paid 25% of the amount of the ordinary bankruptcy credits”.

As a result of this sentence the question is inevitable ¿What is the percentage of payment of the debts that the debtor must offer so that the attempted out-of-court payment agreement is reasonable enough for the judge, in his view, to accept the exoneration of the debts?

In my opinion, general rules cannot be established, due to the enormous casuistry that can occur.

If the procedure of the second chance law is used, in fraud of the law, it is very possible that the debtor does not enjoy the requirement of good faith, and we must remember that according to the   section 3 of article 178 LC, under a somewhat equivocal diction affirms that "only the request for exoneration of the unsatisfied liability will be admitted to the debtors in good faith".

And then he explains what is meant by good faith, by linking this condition to the fulfillment of some requirements that he lists below. Therefore, the legal reference to the debtor being in good faith is not linked to the general concept of  art. 7.1 CC, but to the fulfillment of the requirements enumerated in the  section 3 of art. 178 LC .

In other words, it will be the judge who must determine if all the requirements are met to obtain the benefit of exemption from liabilities, but in no way, it is a matter to be assessed by the bankruptcy mediator, as has happened to me on some occasions, that they did not accept the appointment, because it was not feasible to reach an agreement, considering that the procedure was used with fraudulent intent.

I have also said, as I have expressed it to some lawyer, that it would be a shame to contaminate a procedure with a clear social purpose, introducing files of strategic insolvencies or to facilitate selective dations in payment, of people who live in "B", telling them very graphically that you can not go to court in a brand new Porsche Cayenne, and claim the exoneration of debts.


The ruling of the Supreme Court has shed some light on this matter. 381/2019   of July 2, 2019, which makes a final interpretation of article article 178 bis), in accordance with the purposes of the second chance law, but not before declaring the obscure nature of the precept.

We said at the beginning of the entry that the exoneration of the dissatisfied liability could be final (178 bis.3 4º), since the exoneration of the unsatisfied liability was declared, once the privileged credit and the credits against the mass were paid, or provisional (178 bis.3-5º), which required submitting to a five-year payment plan.

Just as the precept had been interpreted, it came from saying that for the provisional exemption, it was necessary to pay credits against the mass and the privileged, and the establishment of a payment plan for ordinary credit, not directly exonerated.

The consequence of this interpretation was that if, despite the bankruptcy procedure, the release of public credit was not going to be achieved (usually social security and AEAT and which was the most important), it was not really worth starting a procedure of this nature.

Personally, before the consultations that are made to me, I have always made a lot of reservations about initiating a second chance procedure, in the case of individual entrepreneurs, if there was public credit.

The sentence cited makes a different interpretation, and tells us that the law, by articulating the alternative way of ordinal 5, under the  rate  to facilitate the granting of the benefit as much as possible, it intends to facilitate compliance with this requirement of payment of credits against the mass and privileged, and for this it grants a term of five years, but requires a payment plan, which plans its compliance .

Under the logic of this institution and the purpose that guides the norm, which is to facilitate as much as possible the "full exoneration of debts", we must understand that also in the alternative of ordinal 5, the exoneration covers all credits outside the plan of payments.

And this payment plan only affects credits against the mass and the privileged.

And in those cases in which compliance with this partial reimbursement is found to be impossible, the judge could reduce it to accommodate it partially to what the debtor could objectively satisfy during that legal period of five years, in attention to the assets and the attachable income. or available to the debtor, and always respecting the equitable interest of these creditors (against the estate and with general privilege), in attention to the bankruptcy rules of preference between them.

However, this interpretation clashes with a sentence in article 176 bis that tells us that "Regarding public law credits, the processing of requests for deferment or installment will be governed by the provisions of its specific regulations."

Well, the sentence to which we refer, except for this contradiction, stating that the payment plan has been judicially approved, it is not possible to leave its effectiveness to a subsequent ratification of one of the creditors, in this case the public creditor.

Those administrative mechanisms for forgiveness and deferment of payment are meaningless in a bankruptcy situation.

This contradiction makes it practically ineffective to achieve the goal pursued by the  art. 178 bis LC  (that full exoneration of the debt can be achieved in some case), therefore, under a teleological interpretation, the sought protection of public credit must be subsumed in judicial approval.

The judge, previously, must hear the parties in person (also the public creditor) about the objections presented by the payment plan, and attend only to those objective reasons that justify the disapproval of the plan.

Leganes July 27, 2019.

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