Tomarial's partner and responsible for its Legal area, Tomas Vazquez Lepinette, has published in the Bankruptcy Law Magazine of the ICAV (Illustrious Bar Association of Valencia) the article entitled «The phenomenon of startups and bankruptcy law». In the introduction to the text, he explains that "the Valencian Community is undoubtedly a welcoming land and favorable to the creation of startups", since since 2017 more than a thousand have been created and there are 12 incubators and 17 accelerators dedicated to this type of company, with an investment of more than 200 million euros. The article focuses on the relationship between bankruptcy law and startups, since most of them fail before consolidating their project.
Tomás Vázquez Lépinette details in this legal article, which you can consult from this link, the legislative differences in Spain with respect to the Italian model with regard to bankruptcy law and startups. And the so-called “mass competition” stands out, a solution of the Spanish legal system “that allows investors to quickly put an end to the startup, to resume their activities with other projects. But the risk of submitting the insolvency application after the deadline must be taken into account, which could lead to the insolvency declaration as guilty!!»
The article states that "the Spanish solution is completely different from the Italian regulation regarding innovative startups, which combines greater flexibility in terms of the mandatory dissolution obligation (which only occurs when own funds meet two years followed by less than two-thirds of the share capital) with a debt restructuring procedure that excludes bankruptcy,
applying exclusively the rules of over-indebtedness. The Italian legislator's option is clear: allow startups to survive at the cost of maintaining a very weak financial structure while waiting for them to start up and begin the growth phase that would heal everything, or follow the criteria applicable to ordinary companies. It is undoubtedly the same type of reasoning that has led the Spanish legislator to the successive suspensions of the regulations on mandatory dissolution as a consequence of the pandemic caused by COVID.
Tomas Vazquez Lepinette and tomarial They have extensive experience in legal advice to startups. If you need to resolve any questions regarding this type of company, contact us.Contact us and we will study your case to advise you.
