DEATH OF THE INSOLVENT DEBTOR AND LIABILITY OF THE HEIRS

Abstract

Probate and bankruptcy laws may converge in the event of the bankruptcy of the estate or the death or declaration of death of the insolvent debtor. The author of this article analyses the effects of the acceptance of inheritance and the heir's liability under the Spanish Civil Code, this being the starting point for a study of the bankruptcy provisions under the Bankruptcy Act (LC) and, in particular, the death of the insolvent debtor; it is concluded that a literal and independent interpretation of article 182 LC as regards article 1.2 and 3.4 LC seems reasonable to enable the bankruptcy of the deceased to continue as that of the undivided estate, even in the case of outright acceptance thereof, producing its effects at a later date, after completion of the bankruptcy proceedings, leading, where appropriate, to the bankruptcy of the heir. Thus, the provisions of the Civil Code would apply, whereby the assets of the estate and those of the heir are automatically separated after acceptance, for the benefit of the creditors of the estate, who would have pre-emptive rights for collecting payment from the remnant estate (ranked according to the priority set by the Bankruptcy Act) over the creditors of the heir.