Introduction
Despite the novelty of the figure, the Restructuring Expert (“ER”) is playing a very relevant role in the non-consensual restructuring processes that have recently been approved in Spain. And this relevance may have caused some surprise if we look at the scant weight it has within the legal text. The Insolvency Law (“LC”) does not outline in great detail the nature and functions of the ER: its regulation is somewhat lost in Book II, in a handful of brief and incomplete articles (see Arts. 672-681). But I believe that this legal parsimony is premeditated. The ER was not a well-known institution in our insolvency law and therefore, there was not enough practical experience to design, without the risk of making a mistake, a rigid and complete regulation of this new actor in our insolvency law. The European Restructuring and Insolvency Directive obliged Spain to introduce it into our legal system and the LC has opted for an open regulation without many corsets so that the practice itself would be in charge of specifying its nature and shaping its functions. This legislative option has its advantages, but naturally also its disadvantages; in particular, it increases the doubts of interpretation and application of the rules.
The purpose of this entry is to analyze one of these doubts: the possibility of appealing the appointment of the RE. It may seem a minor issue, but its importance is remarkable as it affects the proper functioning of the system and one of its core principles.
Where the problem lies
Article 677 LC provides the grounds for challenging the appointment of the expert (paragraph 1) and the procedural channel for doing so (paragraph 2). According to the first paragraph, this appointment can be challenged on three grounds: that he does not meet the legal conditions to be an expert, that he incurs in any incompatibility or prohibition, or that he does not have an adequate coverage to respond to possible damages. The second paragraph of this precept is a rule of remission. It establishes that the challenge to the appointment of the expert will be processed through the channels of the bankruptcy incident; that is, it refers to Articles 532 to 543 LC (Chapter III “On the bankruptcy incident”, Title XII of Book I). Following these precepts, Article 547 (which is already in Chapter IV “Appeals”) states, in general, that an appeal may be filed against the judgments issued by the insolvency judge.
After reading these articles, the question that immediately arises is related to the scope of the reference made by Article 677.2 LC: does it only reach Chapter III (“On the bankruptcy incident”) or does it also include Chapter IV (“On the appeals”)? In principle, the literal meaning of the legal term “channels of the bankruptcy incident” would also include its appeals, so the most immediate conclusion of a logical-formal interpretation would be that the decision (sentence) that resolves on the incident of impugnation of the appointment of the ER can also be appealed.
This is the understanding of the Provincial Court of Barcelona (Judgment of June 28, 2023) and a very qualified sector of the doctrine (J.C. González Vázquez, El experto en la reestructuración: una primera aproximación crítica, R.G.I.&R., 11, 2023, p. 83 and following, p. 100).
Apart from the logical-formal argument, this “all-encompassing” reference to the insolvency proceeding, which would also reach its appeals regime, is justified fundamentally for two reasons: (i) its conformity with the pro actione principle “which prevents extending to unforeseen cases the rules that exclude the possibility of filing an appeal against the judgment that resolves the insolvency proceeding” (SAP of Barcelona, cit, para. 12) and (ii) an a contrario interpretation of Articles 659 and 663: “contrary to what occurs with other precepts (Articles 659 and 663 TRLC) which expressly exclude the appeal, Article 677 TRLC does not say anything in this sense, therefore we understand that the exception cannot be extended, especially when this results in a limitation of rights” (Ibid.).
This conclusion, however, contrasts with the material grounds of the whole of Book II LC (also, J. Pulgar, “Article 677” in J. Pulgar (dir.) Comentario a la Ley Concursal, II, 3rd ed., p. 1482 or Diario La Ley, nº 10369, of October 17, 2023, p. 10). In strictly evaluative and functional terms -or if preferred, axiological and teleological-, I believe there is consensus on what the answer to the question should be:
it makes no sense for the decision on the appointment of the restructuring expert to be subject to appeal.
The disagreement lies in whether the correct interpretation of the LC leads us inexorably to the other conclusion, i.e. to the possibility of appeal, and therefore, as long as the legislator does not intervene, we must resign ourselves, as those who defend de lege lata the possibility of appeal seem to accept.
In my opinion, this is not so: (i) The two arguments given in favor of understanding the referral as an “all-encompassing” referral are very weak; (ii) The substantive reasons manifestly advocate excluding the possibility of appeal; (iii) and the so-called “condition of epistemic certainty” is present to give preference to the latter over the formalist interpretation of the referral.
Material realizability of the rule
I will begin with the substantive arguments: Ihering’s so-called -as Prof. Paz-Ares likes to remind us- “material realizability” of the norm. On the one hand, it is quite clear that the appointment of the expert is an instrumental piece at the service of an end: the restructuring plan (see Art. 679 LC). And it is quite absurd that the accessory or instrumental part, the appointment of the expert, has more procedural guarantees than the main part, the approval of the plan itself. What is transcendental, insofar as it is what really affects the subjective rights of the interested parties and can even completely extinguish these rights, is the approval of the restructuring plan. However, the controversies as to whether or not the conditions for granting it are fulfilled are resolved in a single instance: before the Provincial Court as a consequence of its challenge, when there has been no prior contradictory hearing (Art. 653 LC); or before the commercial judge, if the applicant has chosen this route (Art. 662 LC). It is, therefore, valuationally inconsistent that there is no appeal against the judicial decision to approve the plan, but only against what is merely an instrumental appointment for this approval: the appointment of the expert.
Moreover, it is remarkably dysfunctional. In a situation of extreme urgency, where every day that passes the company is losing value and the probability of bankruptcy increases exponentially, interruptions and judicial appeals are an expensive luxury, and the best is the enemy of the good. The life of the company depends on getting things resolved as soon as possible. For this reason, Book II of the LC, while naturally respecting the right to effective judicial protection, has opted to reduce procedural delays in the interest of preserving economic value. Hence the importance of the principle of minimum -but fundamental- judicial intervention, which is underlined in the Explanatory Memorandum of Law 16/2022. Well, the possibility of appealing the appointment of the expert openly contravenes this principle and the purpose it pursues. The dysfunctionality can be clearly seen if the applicant has opted for the prior contradictory procedure. As the appeal should not suspend the main proceedings, the absurdity could arise where a plan has been approved by a court decision which is final and enforceable (see Art. 659 LC), but the appointment of the expert is revoked several months later. This could give rise to all kinds of conjectures as to the effects of this new judgment.
It is true, however, that this revocation by the expert need not necessarily affect the merits of the main issue, since the judicial decision on the valuation of the business is ultimately made by the judge who approves the plan. But then what would be the point of such an appeal?
The arguments in favor of an all-encompassing interpretation of the referral
On the other hand, the two arguments invoked in favor of a referral to the insolvency proceeding, including its system of appeals, are not very convincing. The pro actione principle has very little weight, or at least no more weight than other hermeneutic criteria, in the case of appeals before a second instance in the civil order. In the words of the Constitutional Court:
“… the hermeneutic principle pro actione operates in the initial phase of the process, to access the judicial system, and not in the successive ones, achieved that was a first judicial response to the claim, ….This being so because the right to appeal does not arise directly from the Constitution, but from what the procedural laws have provided, and is incorporated into the fundamental right in its legal configuration.” (STC 30/2022).
The teleological and evaluative arguments can, therefore, perfectly defeat any principle in favorem appellationis.
And as far as the argument to the contrary is concerned, I believe that it simply does not apply (also, Pulgar, loc.cit.). Precisely, and as the reader will have already intuited, what is deduced from the silence of article 677.2 compared to the express proclamation of articles 659 and 663 is an a fortiori interpretation, not a contrario: if the decision on the main issue, i.e. the approval of the restructuring plan, cannot be appealed, there is even less reason to appeal against the decision on the accessory or instrumental issue.
Finally, I believe that we are faced with a very clear example in which the dissociation between form and substance, between the formal realization of the law and its material realization, is undoubtedly in favor of the latter.
A methodological digression
Today, it is now accepted that teleological reductions are a legitimate method of judicial development of the law. Naturally, to avoid arbitrariness or alternative uses, such reductions must be made under very strict methodological conditions. First, there must be a divergence between the formulation of the rule and its underlying justification: between the letter and its spirit. That is, when we find that the literal tenor of the rule covers cases that do not correspond to the axiological and teleological reasoning that informs the rule. But, in addition, there must be consensus in the legal community on such divergence. As Professor Paz-Ares has also recently reminded us, the condition of epistemic certainty must be met. In his words:
“….the recognoscibilidad of such divergence in the eyes of the legal community, because as it becomes more evident or less debatable the adjustment operation from the point of view of the “reasons of the legislator” will have less impact on the values of predictability, decisional efficiency and distribution of powers associated with legal certainty. This is what we can call the condition of epistemic certainty.”
Moreover, continues the same author, between the two conditions there is a close correlation: the more serious the divergence between the letter of the law and its spirit, the easier it will be to comply with that condition of epistemic certainty. And therefore, the less one can appeal to legal certainty and in particular to the foreseeability or protection of legitimate expectations to justify a formal or mechanical application of the rule. Quite the contrary: people should not expect the law to produce shocking, dysfunctional or inopportune results. Or, to put it more plainly, the Law, and in particular private law, does not want to annoy people and therefore the abstract-logical perfection of the Law should be avoided when it leads to this result.
Well, what I am interested in emphasizing now is that if, under these premises, it is methodologically justified to make teleological reductions of the tenor of the rule (in fact, it is mandatory to do so if we understand Law as a “legal system”), it will be even more justified when the rule does not directly regulate a matter, but does so by remission. The cross-reference is a technical-legal means to avoid uncomfortable repetitions. However, the scope of the referral must always be determined in accordance with the principles of the sector in which the referral rule is situated and, therefore, every referral carries an implicit condition: the referred regime will be applied as long as it is compatible with the principles and purposes that inform that sector. Otherwise, it will be necessary to make the substitutions and adaptations -reductions or extensions- required for the internal coherence of the system. And in particular, the scope of such remission must be reduced when its mechanical, logical-abstract application causes unbearable axiological or teleological contradictions. The Germans use the term Verweisungsanalogien to define this type of referral rules, subject to an explicit or implicit condition of meaning: the rule to which we are referring will be applied “insofar as it is appropriate”, i.e. insofar as it makes sense (sinngemäss).
Return to positive law
This is what, in my opinion, is happening in the case at hand: I sincerely believe that the double necessary (but also sufficient) condition is met in order to proceed to make a teleological interpretation of the referral or, if preferred, to interpret that we are dealing with a “meaningful referral” to the channel of the insolvency proceeding. On the one hand, it is clear that there is no substantive justification for the possibility of appealing the appointment of the ER. As I have already pointed out, it is contradictory in value with the fact that the “main issue”, i.e. the approval of the plan itself, cannot be appealed on appeal. But, above all, with the fundamental principle on which, for better or worse, all pre-bankruptcy law rests: the principle of minimum judicial intervention. Due to the urgency of the situation, judicial control is reduced to what is strictly necessary to safeguard legitimate interests and ensure effective judicial protection. And, in this sense, it is openly dysfunctional and therefore teleologically contrary to the purpose of pre-bankruptcy law that the appeal with the dilatory effects that this entails can be used to discuss the relevance of the expert already appointed. On the other hand, there is no argument in favor of giving preference to the “formal realizability” of the law over its “material realizability”, so that it can be said without risk that this condition of epistemic certainty is met.
And, as a final consideration, I am not inventing anything. The LC usually refers the procedural processing of many controversies to the so-called “bankruptcy incident”. But the first commentators of the Law already warned us to take these referrals with certain “grains of salt”. As correctly indicated by Prof. Tirado, when the LC makes a reference to the procedures of the bankruptcy incident, the rules governing this incident must be applied except in two situations (i) that expressly provide otherwise, or (ii) “that it would be contrary to the nature of the matter being heard” (see I. Tirado in A. Rojo/E. Beltrán, Comentario de la Ley Concursal, 2004, t. I, p. 679). I would only add that this second safeguard includes the value and functional coherence with all the other rules in whose institutional framework “the matter being heard” is inserted.