Bankruptcy law and legal regulation in Ecuador, a brief analysis of Spanish legislation as a reference

Abstract

Bankruptcy law is a fundamental branch of law for dealing with bankruptcy and insolvency situations, both in the corporate field and in the case of individuals. Its main purpose is to regulate agreements between the debtor and its creditors, in order to find possible solutions for the fulfillment of the debts owed. In cases where such agreements cannot be reached, the liquidation of assets is used as a solution to fulfill the outstanding financial obligations. This article seeks to highlight that Ecuadorian bankruptcy legislation is not sufficiently developed to ensure that this branch is applied effectively, as is the case in Spain. Due to the fact that Spanish legislation contemplates broad classifications of the insolvent debtor's financial obligations and credits, with the purpose of simplifying the process of fulfilling obligations, achieved through the creditors' agreement and the liquidation of the active mass of the insolvent debtor's assets. In order to demonstrate the legal gaps and the lack of regulation of bankruptcy law in Ecuador, a comparative study was made of the mechanisms provided in Spain, which demonstrate a wide practical effectiveness.

Keywords: Bankruptcy law, insolvency, corporate restructuring, liquidation, creditors' agreement.