The matter subject to this analysis is decision taken by a Bankruptcy Administration dealing with three companies of the same company group which are involved in a bankruptcy proceeding. Given the situation and in response of the confusing information of assets, the Administration under discussion decided to gather the three companies joining all their creditors in a sole debt pooling and besides, joining all the rights and assets of the three companies.
Against this decision, two of the creditors involved in the bankruptcy proceedings have contested the list of creditors in the Company Court No.4 of Barcelona which dismissed the application to contest the list, ratifying the decision to gather assets and liabilities which had been applied by the Bankruptcy Administration.
Against such rejection, the creditors filed a writ of appeal as a result of which, it was issued a Judgement by the Court of Appeal of Barcelona dated June 28th, which is the Judgement object of this analysis.
The Court of Appeal begins its Judgement by analyzing the legal regulation of the accumulation of bankruptcy proceedings and their effects, declaring that these are very limited and specific. Accordingly, the Court of Appeal establishes that the legislation does not state at any stage, the prospective gathering of assets and liabilities and prohibits the joint treatment of bankruptcy proceedings as if it was a sole bankruptcy proceeding. Therefore, the Court limits the effects of the accumulation allowing the appointment of a common insolvency receiver and to the joint performance of assets whose ownership is common. According to the Court of Appeal this prohibition to joint assets responds to the requirement in regards to the different legal form of the different companies involved, as well as the preservation of the rights of minority partners and creditors, since otherwise the collection rights of the later could be limited.
However, further to this legal analysis on the gathering of bankruptcy proceedings and their effects, the Court declares that bankruptcy proceedings could be dealt jointly in certain exceptional occasions in the same way that in the course of an extrajudicial claim may apply the legal figure named “lift of veil” which is applied in case of confusion of assets of a company.
According to the above, the Court of Appeal considers the specific case and after studying the different facts that were taken into account by the Court of First Instance, the Court of Appeal confirms the gathering of assets and liabilities in this case.
Therefore the Court of Appeal considers applicable the gathering of the three insolvent companies and its joint activity as if they were only one sole company, taking into account that the companies share the same partners, develop the same activity, share the same corporate image, the same workers and the same equipment, as well as the Department of administration, in those cases when there are financial irregularities registered in all the companies.
In conclusion, insofar the three companies acted as if they were one single company, with the same real and personal elements and there are no difference amongst them, the Court decides to apply the “lifting of the veil” and consolidates into one single group all the assets and liabilities of the three companies.