Francisco Prada advocates for regulating the qualification of insolvency practitioners based on the model used for statutory auditors

PradaGayoso’s founding partner argued this position at a web seminar hosted jointly by the Bar Association of A Coruña and Gobid

The qualification of insolvency practitioners could be regulated based on the model used for statutory auditors, where an independent body –namely, the Spanish Accounting and Auditors Institute– holds a qualifying examination leading to registration with the Spanish Register of Statutory Auditors.

The above was proposed by Francisco Prada, who is a lawyer, economist, auditor, insolvency practitioner and PradaGayoso’s founding partner, at a web seminar hosted jointly by the Bar Association of A Coruña and Gobid. Also participating in the meeting, that was facilitated by lawyer Jesús Sánchez Veiga, was the Chairman of the Spanish Insolvency Practitioners Association (Aspac), Diego Comendador.

According to Francisco Prada, the examination leading to qualification as an insolvency practitioner should be mandatory for every single person practising, having no seniority-based exceptions. Also, Mr. Prada stressed the need to establish a procedure to periodically renew the qualification of insolvency practitioners.

‘It is arguable that 12,000 experts on this matter may exist in Spain, in particular where they have emerged in a short lapse of time, attracted by a wrong view of the profession’, remarked Francisco Prada, in reference to the increase of companies and individuals.

In his opinion, it is necessary to leave behind the prevailing model of ‘non-expert practitioners’ whereby no specific qualification is required to act as an insolvency practitioner, and to move to a greater professionalization in the form of ‘insolvency experts’ having the appropriate knowledge and integrated in multidisciplinary groups.

‘In large bankruptcy proceedings, legal, economic, financial, labour and management issues overlap. Thus, the required body of knowledge is such that it may hardly be embraced by a single individual’, he added.

Francisco Prada reminded that an insolvency practice bylaw is pending since October 2014, when the Spanish Insolvency Act was amended, and in his opinion, the regulation of access to the profession might contribute to improve its social recognition.

PradaGayoso’s founding partner also referred to the professional responsibility of insolvency practitioners, which has ‘gradually increased’ due to the multidisciplinary nature of the profession, particularly referring to tax, criminal and data protection accountability issues. ‘Penalties are very frequently incurred for failure to comply with the required formalities, or for late compliance with them’, he stated. Consequently, he recommended ‘to be particularly rigorous and vigilant about both ourselves and our teams.’