New features introduced by the new Law on urgent insolvency-related measures
Spain has recently seen the entry into force of Law 9/2015, of May 25, 2015, on urgent insolvency-related measures, which incorporates into the Insolvency Law (“LC”) the text of Royal Decree-Law 11/2014, of September 5 (“RDL 11/2014”), which made major changes to the classification of claims, the contents of the arrangement with creditors and the majorities required for its approval or the transfer of production units in insolvency proceedings.
Most of the changes made to the Insolvency Law are technical improvements to resolve doubts that arose in prior reforms, although there are also significant new provisions, such as the new Law authorizing the government to draw up and approve a Revised Insolvency Law in order to consolidate and harmonize the changes introduced in the successive reforms of the LC (mainly in 2009, 2011 and 2014).
The main new changes introduced by this latest reform are most notably the following:
1. Changes to the arrangement with creditors.
- Proposals for arrangements may include “alternatives”, in addition to debt composition and rescheduling (art. 100 LC).
- Possibility of modifying advance proposals for an arrangement that have not been approved (art. 110 LC).
- Preferred claims and quorum for convening creditors’ meetings (art. 116.4 LC).
- Calculation of majorities for approving an arrangement and preferred creditors (art. 124).
- New rules on modifying the arrangement (transitional provision three of the Law).
2. Changes relating to liquidation.
- Precautionary payment into court of cash (art. 148.6 LC).
- Legal rules on liquidation and rules for sales of production units.
- Priority of the liquidation plan: the rules of the enforced collection proceeding are secondary (art. 149.2 LC).
- Measures relating to transfers of production units.
- Period for submitting final report on the liquidation (art. 152 LC).
- Collection by the specially preferred creditor of the proceeds obtained from realizing the asset and up to the amount of the original debt (art. 155.5 LC).
3. Changes to assessment of the insolvency: inclusion of the element of causality in certain presumptions of fault (art. 165 LC).
4. Changes relating to the proceeding provided for in article 5 bis LC (“pre-insolvency”).
The new features introduced by this new Law are discussed in greater detail in a document drawn up by our specialists in this practice area.
Garrigues Restructuring and Insolvency Department