{"id":11536,"date":"2022-04-22T13:10:51","date_gmt":"2022-04-22T13:10:51","guid":{"rendered":"https:\/\/vila.es\/?p=11536"},"modified":"2022-04-25T16:36:06","modified_gmt":"2022-04-25T16:36:06","slug":"tortious-insolvency-requirements-to-be-considered-an-abettor-and-the-consequences-of-abetting-insolvency","status":"publish","type":"post","link":"https:\/\/vila.es\/en\/bankruptcy\/tortious-insolvency-requirements-to-be-considered-an-abettor-and-the-consequences-of-abetting-insolvency\/","title":{"rendered":"TORTIOUS INSOLVENCY: REQUIREMENTS TO BE CONSIDERED AN ABETTOR AND THE CONSEQUENCES OF ABETTING INSOLVENCY."},"content":{"rendered":"

It is not uncommon for courts of first instance to fail to distinguish adequately between an abettor<\/u> and those persons affected by tortious insolvency<\/u>. Nor do they make an adequate distinction when it comes to attributing the right responsibility<\/u> to both parties.<\/p>\n

The Sentence of the Supreme Court of the 14th<\/sup> of September 2021 attempts to tackle these issues, elucidate these key concepts and define areas of responsibility.<\/p>\n

In this case, the judgment passed by the court of first instance, after having classified the insolvency as tortious,<\/p>\n

(i) determined that the persons affected by this classification<\/u> were, on the one hand, the administrator of the insolvent party, and, on the other hand, two natural persons and one legal person (who were declared abettors<\/u> in the court of third instance);<\/p>\n

(ii) prohibited, for five years, all persons affected by the classification<\/u> to administer third-party assets, engage in trade or to hold a post or intervene in a company;<\/p>\n

(iii) declared the joint and several responsibilities of all persons affected by the classification<\/u>, amounting to the sum total of the insolvency deficit, other costs and pecuniary responsibilities;<\/p>\n

(iv) declared the loss, by all persons affected by the classification<\/u>, of the right as insolvency creditors or against the insolvency estate;<\/p>\n

(v) ordered them to pay the necessary costs.<\/p>\n

The judgment passed in the court of second instance revoked the prior ruling and left, without effect, all the decisions relating to the two natural persons and one legal person (who were declared abettors in the court of third instance).<\/p>\n

In the third level of jurisdiction, the Supreme Court carried out an analysis of insolvency abetting<\/u> and of the responsibility of the abettors<\/u>.<\/p>\n

A) Regarding Insolvency Abetting<\/u>.<\/p>\n

    \n
  1. The concept of an abettor<\/u> was defined as a third party, cooperating in a manner unrelated to the debtor or to those who act on their behalf, which determines the classification of the insolvency as tortious. It is inappropriate to declare simultaneously an abettor<\/u> and person affected by the classification<\/u>, because the former is a co-operator and the latter a perpetrator.<\/li>\n<\/ol>\n
      \n
    1. Regarding the requirements, the Judgments of the Supreme Court (STS<\/em>) 5\/2016, of the 27th<\/sup> of January, and 202\/2017, of the 29th<\/sup> of March, indicated that there are two necessary conditions: (a) a relevant cooperation with a debtor who is a natural person or the representatives if it is a legal person, in the carrying out of the acts that serve to establish the insolvency as tortious and (b) a cooperation carried out knowingly and wilfully or with gross negligence.<\/li>\n<\/ol>\n
        \n
      1. The Court highlighted that the judgment of classification must comply with the following requirements:<\/li>\n<\/ol>\n

        (i) description, in a precise manner, of the conduct and legal duties the action or omission of which constitute abetting;<\/p>\n

        (ii) said description must be based upon a sufficiently evidential activity;<\/p>\n

        (iii) a causal relationship must exist between the imputed and proven acts and those generating or worsening the insolvency that have been the basis of the classification of the insolvency as tortious.<\/p>\n

          \n
        1. Furthermore, the Court indicated that the action of the abettor must be directly related to the conduct which has determined the classification of the insolvency as tortious and that an intention to defraud<\/u> (consilium fraudis<\/em>) or, at the very least, a collusion<\/u> with the insolvent party (conscius fraudis<\/em>) must exist.<\/li>\n<\/ol>\n

          B) Regarding the responsibility of abettors. <\/u><\/p>\n

            \n
          1. The Court declared that abettors cannot be penalised to cover the insolvency deficit<\/u>, since legally responsibility is only stipulated for certain persons affected by the declaration of tortious nature<\/u> of the insolvency.<\/li>\n<\/ol>\n
              \n
            1. The Law stipulates a general consequence<\/u> that consists of the loss of any right as creditors of the insolvency and other particular consequences<\/u>, based upon their conduct (such as the penalty to return the assets and\/or rights that they may have obtained unduly or indeed the penalty to indemnify the damages caused).<\/li>\n<\/ol>\n
                \n
              1. To cite the Judgment of the Supreme Court 135\/2019, of the 6th<\/sup> of March, it stated that: \u201cthe penalty to indemnify damages must be a consequence of the concrete damages caused by the conduct, in the carrying out of which (the abettors) have participated and in accordance with their participation. An \u201coverall\u201d penalty that does not discriminate between the causes of the classification of the insolvency as tortious in those which the abettors have participated and those causes in which they haven\u00b4t participated, without bearing in mind the importance of their participation in such conducts.\u201d<\/li>\n<\/ol>\n

                In the case study, the relation between the conduct of abettors and the fact that the creditors were not able to receive the sum total of their credits was not justified. The only indemnifiable harm was that of the pecuniary responsibilities.<\/p>\n

                As a consequence, the judgment of the court of third instance:<\/p>\n

                (i) Left, to no effect, the classification of the appellants as persons affected by the tortious classification,<\/u> with the resultant penalties;<\/p>\n

                (ii) Declared them to be abettors<\/u>;<\/p>\n

                (iii) Ordered the loss of the rights as creditors of the insolvency, due to their consideration as abettors;<\/p>\n

                (iv) Condemned them to indemnify jointly and severally the damages caused, for the sum of the pecuniary responsibilities credited;<\/p>\n

                (v) Maintained the rest of the decisions contained in the verdict of the judgment passed by the court of first instance;<\/p>\n

                (vi) Did not expressly order the payment of costs.<\/p>\n

                 <\/p>\n

                 <\/p>\n

                Mireia Bosch<\/p>\n

                Vil\u00e1 Abogados<\/p>\n

                 <\/p>\n

                For more information, please contact:<\/p>\n

                va@vila.es<\/a><\/span><\/p>\n

                 <\/p>\n

                22nd<\/sup> April 2022<\/p>\n","protected":false},"excerpt":{"rendered":"

                It is not uncommon for courts of first instance to fail to distinguish adequately between an abettor and those persons affected by tortious insolvency. Nor do they make an adequate distinction when it comes to attributing the right responsibility to both parties. The Sentence of the Supreme Court of the 14th of September 2021 attempts […]<\/p>\n","protected":false},"author":4,"featured_media":4670,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[81],"tags":[],"class_list":["post-11536","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bankruptcy"],"yoast_head":"\nTORTIOUS INSOLVENCY: REQUIREMENTS TO BE CONSIDERED AN ABETTOR AND THE CONSEQUENCES OF ABETTING INSOLVENCY. - Vil\u00e1 Abogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/vila.es\/en\/bankruptcy\/tortious-insolvency-requirements-to-be-considered-an-abettor-and-the-consequences-of-abetting-insolvency\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"TORTIOUS INSOLVENCY: REQUIREMENTS TO BE CONSIDERED AN ABETTOR AND THE CONSEQUENCES OF ABETTING INSOLVENCY. - Vil\u00e1 Abogados\" \/>\n<meta property=\"og:description\" content=\"It is not uncommon for courts of first instance to fail to distinguish adequately between an abettor and those persons affected by tortious insolvency. 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