The Government redirects the new bankruptcy law to maintain the prevalence of payment of contributions and taxes


In recent months, the Government has experienced an underground struggle to solve a fundamental point of the new bankruptcy law: the privilege of public credit, that is, the prevalence for bankrupt companies to pay Social Security debts and pending taxes, the common money that finances public services and pensions. After weeks of tug of war, the position of maintaining this privilege has been imposed on the Executive in the face of pressure from business organizations and associations of bankruptcy administrators that some ministerial officials had assumed.


Entrepreneurs already know what happens when they do not negotiate with the Government

Entrepreneurs already know what happens when they do not negotiate with the Government

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On this occasion it was not a conflict between the government partners, PSOE and United We Can, but between ministries of the socialist orbit of the coalition, although internal sources of the Executive assure that the dilemma had a good load of ideological depth. On one side were the ministerial portfolios of Economic Affairs and Justice, more prone to an exemption from public law credits, and, on the other side, those of Social Security and Finance, which positioned themselves as defenders of the prevalence of the public. .

The Spanish State is obliged to transpose the European directive 2019/1023 to transform the Bankruptcy Law into a more flexible and faster instrument in order to guarantee the continuity of companies and avoid the largest number of company closures. At the beginning of August the bankruptcy reform bill was approved and weeks later, in the heat of the heatwave, the public consultation period was opened in which self-employed organizations such as ATA or UATAE and associations such as the Registry of Forensic Economists and the Professional Association of Bankruptcy Administrators, together with law firms and consultants, further heated the atmosphere with an avalanche of proposals and modifications.

“In the European Union they are aware of the tax and Social Security differences that exist in each country, so they left a very open field for the transposition of the directive that has led to a text in which it could be interpreted that all creditors They do not have to be the same. When the draft that had been promoted by Economic Affairs and Justice was discussed, it was seen that of the 30 articles of the European directive, a text with more than 750 articles had been recast, a new complete regulation had practically been put into operation, where the privilege of public credit had been eliminated, among other inadmissible aspects, “explains a member of the Executive who requests anonymity.

The same source adds that a good part of the new draft came from a recasting of the regulations that was made under the direction of the Luis de Guindos Ministry of Economy during the previous Government of the Popular Party. “There were unacceptable things such as private pension plans having more protection than the money that had to be paid to Social Security contributions, in short, a part of what finances public health or the public pension system”, Add.

The initial text proposed that the abbreviated procedures eliminate the privilege of public credit and make the payment of contributions and taxes conditional on an agreement between private creditors. “We could find that in a bankruptcy process a businessman finishes paying for the purchase of his car and leaves the social contributions of some of his workers unpaid, which in the end we would have to pay together,” they argue.

This position provoked a strong rejection by those responsible for the ministries of Finance and Inclusion, Social Security and Migration. “Either due to ignorance or due to the influence of business organizations in Justice and Economic Affairs, they had accepted the ideological discourse that insists on pointing out the money that businessmen owe to public institutions – and that supports public benefits – as the final cause of the bankruptcy of the company, when it has already been proven that this is not the case, “adds another government source, who requests anonymity.

Self-supervision of the Public Administration

Defenders of the privilege of public credit recall that if it disappears from the future Bankruptcy Law, it would be de facto ending the self-supervision of the Public Administration, an administrative power that allows the postponement and moratoriums of the debts of social contributions and taxes that owe pay the self-employed and companies. They argue this as follows: “No one would understand that postponements or moratoriums were granted on the payment of a debt with a public body that the employer can get rid of if he goes to a bankruptcy process, we would be endangering the continuity of fundamental public services or the payment of pensions “.

“There is a mantra that no matter how much it is repeated, it is not true that it is that public debts lead to the closure of companies, when the opposite occurs: it seeks to offer payment facilities and the continuity of activity. To the Public Administration, be it Social Security or the Tax Agency, they are not interested in closing companies or having a self-employed person lose his job, on the contrary. More unemployment translates into fewer social contributions and more problems for the public benefit system and the same it happens with taxes “, explain sources from the Executive who insist that the best proof is that the measures implemented during the pandemic through moratoriums and postponements or ICO guarantees have served to protect the Spanish productive fabric.

According to the data released by the Ministry led by José Luis Escrivá, with the impact of the last financial crisis, the average number of Social Security debtors between 2009 and 2013 was 1,400,517, while in January 2021, thanks to the moratoriums, the businessmen who owed social contributions was 26% less, 1,031,130 defaulters. In addition, while in 2012 the percentage of unpaid Social Security was around 3.5%, the measures approved by the Executive that provided liquidity and postponed public debts have allowed that non-payment arrears and defaults on Social Security are not increased. maintained in 2020 at 2%, the same level as in 2019.

During the financial crisis between 2008-2015, more than 42,500 companies applied for bankruptcy, but only 7.5% survived. From the employers’ organizations to those responsible for the Public Administration admit that during 2020 the insolvency proceedings were held back by the moratoriums, postponements and the approved liquidity measures. Now the self-employed and business associations have indicated that in the parliamentary processing of the rule they will again try to influence the parliamentary arch to eliminate the privilege of public credit.

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