Bankruptcy of creditors for breach of obligations

Abstract

This article analyzes the state of insolvency or bankruptcy that may be incurred by those who default or fear default on their obligations. This breach is the source of a new legal situation and an economic and patrimonial state of the debtor, which is declared judicially to organize its creditors legally and preserve the insolvent debtor’s assets and later liquidate and distribute them.
Once this situation has been analyzed (which may be fortuitous, guilty or fraudulent), the five types of bankruptcy procedures that Ecuadorian legislation provides are reviewed and differentiated: preventive, preventive for commercial companies, exceptional preventive, voluntary and necessary, highlighting the effects and consequences that each one of them generates for or against the debtor.
Finally, the authors’ conclusions regarding this legal institution and its application in the Ecuadorian judicial system will be reviewed.

KEYWORDS: Contract law, civil liability, legal procedure, credit, debts.

JEL CODE: K0,K2, P23