DEBTORS’ PERFORMANCE DURING THE EXECUTION OF THE INSOLVENCY ARRANGEMENT AND RECOVERY OF THE BANKRUPT’S ESTATE THROUGHOUT LIQUIDATION

Abstract

Th ere are two possible solutions to bankruptcy: agreement and liquidation. When an agreement is reached and complied with, the aim of the bankruptcy procedure has been attained. If, instead, the debtor breaches the agreement, it is necessary to make the transition to the liquidation procedure in order to sell the assets and pay the creditors. Th e transition from the agreement to the liquidation raises a number of problems. Among them the question about the eff ectiveness of those transactions entered into by the debtor during the implementation of the arrangement that are detrimental to the creditors’ interests, stands out. It is the tricky problem of recovering the debtor’s assets for the liquidation after breach of the arrangement. Th is paper focuses on the mechanisms necessary to recover for the bankrupt’s estate those assets that have unduly exited the debtor’s property during the implementation of the arrangement. Together with the instruments expressly provided by the law, this paper examines the possibility to apply in liquidation the remedies established for the avoidance of transactions detrimental to creditors made prior to the bankruptcy order, as well as the limits thereto.