Bankruptcy proceedings are complicated, long and expensive processes, in which it is essential that the bankruptcy administrators comply with certain legal requirements and demands.
A job that requires them to have insurance protection to cover themselves against possible lawsuits by third parties who consider themselves harmed.
Best Insurance for Insolvency Administrators
Royal Decree 1333/2012, of September 21, establishes that you must have Civil Liability insurance or an equivalent guarantee proportional to the nature and scope of the risk covered in order to act as a bankruptcy administrator in any type of bankruptcy.
In conclusion: without this insurance, the professional will not be able to practice as such.
Civil Liability insurance for Bankruptcy Administrator
This insurance establishes risk coverage from the birth of the obligation to indemnify the debtor or creditors for damages caused by acts and omissions carried out, in the exercise of their functions, both by the bankruptcy administrator and by the delegated assistant. , whose actions are responsible, as long as they have been contrary to the law or have been carried out without due diligence.
Likewise, the Civil Liability insurance of the bankruptcy administrator or equivalent guarantee will include the coverage of damages and losses for acts or omissions of the bankruptcy administrator that directly harm the interests of the debtor, creditors or third parties.
In addition, the insurance must cover the necessary expenses that the creditor who would have exercised the action in the interest of the estate would have borne.
Risks and Claims to which a Bankruptcy Administrator is Exposed
The bankruptcy administrator can see how claims are presented to him for both acts and omissions in his functions; that are negligent, contrary to the law or carried out without due diligence; generate damage to the mass; and as long as a causal relationship between the action and the damage caused is demonstrated.
Some of the most common cases for which a bankruptcy administrator is exposed to claims are the improper inclusion of non-existent credits; non-payment of VAT quota; not having exercised reinstatement action; making inappropriate sales, not adopting conservation measures; the inclusion of improper creditors; or credit growth.
Insurance Coverage for Bankruptcy Administrators
The RC insurance includes, among other coverages, the General RC, Real Estate Employer and Leasehold, as well as the protection of personal data, with their corresponding sanctions.
You can also incorporate other additional coverages such as:
- Employee infidelity.
- Damage to documents.
- Professional disqualification.
- Coverage for arbitration and mediation activity in civil and commercial matters.
- Moral damages derived from judicial sentence.
- Coverage based on claims with unlimited retroactivity.
- Territorial scope and jurisdiction in Spain.
- Additional notice period of 5 years at no additional cost.
The security coverage provided will last throughout the performance of his role as bankruptcy administrator, and there is the possibility of extending it, even during the four years after he has ceased to hold office.
Update on Bankruptcy and Corporate Legislation
The Consolidated Text of the Bankruptcy Law (Legislative RD 1/2020) that entered into force on September 1, 2020, has replaced the Bankruptcy Law of 2003, and supposes a transposition of the European Union Directive, 2019/1023 of the June 20, 2019, regarding restoration, insolvency and exoneration of debts.
This new bankruptcy regulation seeks the professionalization of the bankruptcy administration, given the growth in the number of bankruptcies in the country, developing in our legal system the insurance or equivalent guarantee of civil liability of the bankruptcy administration with a mandatory minimum coverage.
The legal precept refers to the regulatory development contained in Royal Decree 1333/2012, of September 21, which regulates Civil Liability insurance.
Thus, at the time of acceptance of the position, the validity of that insurance, or equivalent guarantee, proportional to the nature and scope of the risk covered, must be accredited before the judicial office.
In addition, it contemplates a minimum insured sum of 300,000 euros for the bankruptcy administration of an individual, and 2 million for the legal person, expandable up to 2 and 4 million respectively, depending on the number of ordinary bankruptcies, their conceptualization as of special importance, or by the nature of the insolvent entity.
In addition, between articles 94 and 99 of the new law, the idea of establishing an agile system that allows responding for damages that may arise in the development of the work of the insolvency administrators is exposed, when it is possible to impute a reproach for having departed from the professional diligence required of them.