Out Of Court Payment Agreement (XI): Specific provisions on the acknowledgement of claims in a consecutive insolvency proceeding
One of the specific provisions on the consecutive insolvency proceeding is that any creditors who have signed the Out of Court Payment Agreement will not have to request acknowledgement of their claims. In other words, they will not have to give notice of their claims as required in article 85 of the Insolvency Law. Accordingly, the consecutive insolvency proceeding does not dispense with the notice of claims procedure, which is expressly set out in article 242.2.1 of the Insolvency Law –although sometimes it may take place after the insolvency manager’s report has been issued -, but rather relieves any creditors who accepted the Out of Court Payment Agreement of the obligation to comply with that procedure, because, in theory, advantage is taken of the work already done in the insolvency mediation proceeding.
Nothing is specified in the law about the creditors who have not signed the agreement, so those creditors will still need to give notice of their claims, otherwise they may be classed as subordinated claims due to being notified outside the time limit. The same will happen if an Out of Court Payment Agreement has not been reached: it will be advisable for every creditor to request acknowledgement of their claims in the consecutive insolvency proceeding.
In fact, even if an Out of Court Payment Agreement has been reached earlier, it is advisable for every creditor, including those who have signed the agreement, to give notice of their claims to the insolvency manager in the consecutive insolvency proceeding. After all, the acknowledgement of creditors performed in the insolvency mediation proceeding only includes the existence and amount of the claims, but not their classification, which will not be relevant for the purposes of that proceeding. Consequently, the creditors –whether they have signed the agreement or not– must give notice of their claims as they appear when the order for a consecutive insolvency proceeding is made –because variations could have occurred since the acknowledgment performed in the insolvency mediation proceeding– with specification, also, of the classification that the creditor is seeking for those claims.
There will be a special interest in doing so for the holders of post-insolvency order claims under article 242.2.3 of the Insolvency Law, related to costs of the out of court proceeding generated while it was being conducted, because these are claims which, in normal circumstances, would not have been classified as such, but rather deemed pre-insolvency order claims due to arising before the insolvency order. A doubt arises here in connection with the fresh money made available to the debtor under the Out of Court Payment Agreement. These are not claims generated during the out of court proceeding, but after it was adopted. However, the reference in article 242.2.3 of the Insolvency Law to any claims which, pursuant to article 84 of the Insolvency Law, could be treated as post-insolvency order claims could open the door to interpreting that 50% of any claims that have entailed cash revenues granted in connection with an Out of Court Payment Agreement, could also be treated as post-insolvency order claims, on a par with the fresh money contributed in a refinancing agreement.
Similarly, any creditors without collateral who did not attend the creditors’ meeting or show their approval or objection earlier to the proposal for an Out of Court Payment Agreement will want to clarify their position, because they will be penalized by the insolvency manager for the consecutive insolvency proceeding by having their claims classified as subordinated if the negotiation process has failed. In our opinion, the penalty consisting of subordinating a claim should not apply in any of the following events: (i) the amount of the claim of the creditor who did not attend the meeting and did not express an opinion in relation to the proposal for an Out of Court Payment Agreement is irrelevant for the purpose of the agreement not being adopted; or (ii) the proposal for the Out of Court Payment Agreement was still accepted at the meeting, since the article proposing this subordination only refers expressly to negotiations that have failed, not to cases of Out of Court Payment Agreements that were accepted but were later breached or rendered void, for example. It goes without saying that, to avoid any type of harmful consequence later on, it is always recommendable to attend the creditors’ meeting or give an opinion on the proposal for an Out of Court Payment Agreement.
In short, it is advisable for all types of creditors to give notice of their claims to the insolvency manager in the consecutive insolvency proceeding, so that the claim may be correctly acknowledged regarding its amount and classification, in view of the specific provisions established for insolvency proceedings of this kind.
Garrigues Restructuring and Insolvency department
