Dealing with the arguable failure in preserving going-concern value, the reforms of the Spanish Bankruptcy Act have promoted a certain kind of out-of-court workouts as a prior step or even as an alternative to bankruptcy (the “Legally Enhanced Workouts). Perhaps oddly, while bankruptcy petitions increased, this sort of legally fostered out-of-court workouts decreased between 2009 and 2011. Statistics moreover suggest that going-concern companies drew on “unprotected” out-of-court workouts instead of filing the petition, which is still compulsory. This paper argues empirically, through the lens of lawyers, the reasons why distressed companies may disregard the legal incentives akin to the Legally Enhanced Workouts.
While strongly grounded on the economic analysis of corporate and insolvency law, the research work is empirical. It attempts to bring an alternative view to discuss the convenience of “importing” foreign best practices in accordance with the law and society approach. Practitioners are thus most likely familiar with the discussion. The paper is updated to the most recent reforms of Spanish law, while the empirical analysis is restrained to the data available until April 2013 (the date of the last interview). Hence, the research work is concerned with the statistics of 2011. Further empirical research may analyze the impact of the most recent reforms as per the data available for years 2012, 2013, 2014, 2015, and 2016.
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