Order for payment procedures, brazen behaviour and creditors’ arrangements When justice is not served
Paola Tormo—
The so-called Second Chance Act was enacted with a powerful promise: to allow debt-stricken individuals and small business owners to start over. In theory, it is a tool of social justice, designed to rescue people in financial ruin despite their best efforts. However, in practice, this law has ended up generating a profound sense of injustice and uncertainty for key players in the economy: suppliers.
Many companies and self-employed people use this framework to wipe away their debts following legal proceedings. Problems arise when these forgiven debts are not owed to the government or large financial institutions that can absorb the blow, but instead to small suppliers who have held up their side of the bargain: they delivered goods or provided services and trusted that they would be paid. For them, one person’s second chance is another’s financial ruin.
And that is exactly what I have direct experience of a company I had worked with for years asked me to coordinate a complex interpreting job. I was unsure at first because of all the professionals I had to manage and pay, but I accepted based on the promise of “Trust me, we have always paid you. It is a new client who will give us a lot of work. I give you my word.” The end result was two unpaid invoices for a very high amount plus default interest.
After many complaints, empty promises and very bad manners, the company filed for a creditors’ arrangement and a judge decided that their debts were forgiven and they could start again with a clean slate. It is one thing to forgive the debt to the government. But why should the judge decide, on my behalf, to forgive the debt to me, deeming him to need my money more than I do without even involving me in the process? I mention him because he is the sole director of the company, whom I know and have always dealt with personally. And I could not fail to notice on social networks the luxurious life he has been living over the years.
It was a job that involved five professionals, four of whom I paid in full, while I was left with nothing but a look of astonishment on my face. Even filing an order for payment procedure did not help. He claimed to have no money and so got away with it. Wouldn’t it be fairer to make an arrangement to pay the money back in instalments? Or better still, let the state pay off the debts, which they can then claw back from his future income. What is inconceivable is that I should have to pay.
In many cases, this law breaks a basic principle of justice: accountability. Suppliers are not responsible for a client’s mismanagement, financial collapse or failed business decisions. But they end up suffering the consequences. They have to accept that the money that is rightfully theirs will never arrive. There is no real compensation or effective protection mechanism.
This creates a dangerous domino effect. Small suppliers, fearful of not being paid, insist on stricter conditions, demand advance payment, stop working with certain clients or lose them due to the conditions they have to impose. Only large companies that can bear the risk of default will then remain. The result is a market that is more distrustful, less flexible and more hostile to honest entrepreneurs. Paradoxically, a law that was supposed to promote financial recovery ends up weakening the production chain.
It is not a matter of denying people a second chance, but of questioning the cost to those who suffer the consequences. Justice that saves some by ruining others is not fair and simply distributes the harm in an arbitrary fashion. If the system does not properly distinguish between large creditors and small providers, and does not ensure a reasonable balance, the concept of fairness becomes meaningless.
When the law protects the debtor without protecting the vulnerable creditor, the message is clear: it is not always worth it. And this is perhaps the greatest failure of a justice system that, while seeking to be humane, ends up being profoundly unjust.