The Alicante Court Upholds Dismissal in Insolvency Case Amid Questionable Transfers
In a ruling from the Court of Alicante, the departure of the appointed insolvency administrator was approved after authorities found the explanations for using closely held funds insufficient. The court highlighted roughly five million euros taken from the debtor’s accounts, Real Estate Development Company SLD, managed during bankruptcy proceedings. The transfers were directed to companies controlled by or connected to the administrator and totaled several operations that benefited him personally.
In a decision against appeal, a panel of judges, Enrique Garcia-Chamón, Luis Antonio Soler, and Rafael Fuentesdenes, rejected the objections raised by the dismissed manager, José Antonio SC, maintaining the previous stance of the Alicante Commercial Judge from June of the prior year.
The administrator made two separate dismissals that triggered criminal proceedings. One case remains under investigation while the other is awaiting trial, with prosecutors seeking a prison term of up to nine years. The court reasoned that a combination of a lack of explanation and insufficient cooperation not only justified dismissing Mercantil 1’s president, Gustavo Andrés Martín, but also underscored a transparency shortfall that helped enable the alleged misfeasance.
The dismissal request, which led to the court’s decision to remove the economist from the case, cites the improper distribution of funds amounting to about five million euros. The court notes the total sum was derived after deducting a paid fee and the gross amount received, illustrating a pattern of financial maneuvers that went beyond permissible operations.
The instruction describes in detail transfers, expenses, and personal matters of Mr. SC that bore little connection to the bankruptcy, including transactions with ASC Consultants and Asociados SL, Stinvalores SL, and ASC Aurea Auditores SLP, with several amounts surpassing three million euros.
The order emphasizes that the dismissed economist’s personal issues were allegedly funneled to his own companies, even referencing purchases such as knives in Japan. The court noted that the administrator did not refuse any transfers, and it criticized a Dubai trip as well as a Japan purchase of knives, labeling one trip as inconsequential and the other as lacking contractual justification.
Regarding the Dubai trip, the court found that even if the administrator’s private funding theory held, the associated meals and other expenses were not adequately justified. The payment for the trip was recorded as a charge of the bankrupt company, with deductions for VAT and corporate tax, benefiting the company itself. This was interpreted as a sign of moral ambiguity and a conflict of interest in the management of the bankrupt estate.
The report also remarks on the travel expenses being paid privately while claimed as necessary for bankruptcy proceedings. It argues that if the bankrupt entity had not paid, the expenses would have been charged to its own account to secure favorable tax treatment, a point that exceeds the value of the knives purchased in Japan. The court warned that prioritizing personal or third-party interests over those of the creditors constitutes a breach of the loyalty duty expected of a manager, and even any later returns would not erase the seriousness of such conduct.
Additional Proceedings Involving Another Separation
The same manager faced another separation in a different case, which the Alicante Court did not appeal. In that matter, the La Cañada Business Group SL case alleged an allocation of financial resources amounting to roughly 160,000 euros to the bankrupt company. Proceedings extended into further criminal cases, with suspects facing charges including embezzlement, aggravated mismanagement, and abuse. Penalties proposed include several years in prison for nine individuals, with an ongoing investigation into the broader set of allegations.
A later development involved a request to extend a criminal complaint related to a separate individual whose investigation is ongoing. Authorities also sought a precautionary seizure of assets valued at about 13.9 million euros to mitigate potential legal liabilities arising from approximately 7.4 million euros alleged to have been extracted from the bankrupt entity by the dismissed manager. This sequence of events reflects a persistent concern with misalignment between managerial duties and the financial welfare of creditors in this complex insolvency scenario. [Source attribution: Alicante Court proceedings report]