Restructuring and Insolvency Work Commentary 1-2014

The publication of Royal Decree-Law 11/2014, of September 5, 2014 on urgent insolvency-related matters (the “Royal Decree) in the Official State Gazette took place on Saturday (September 6). This new instrument has changed a number of key elements of the Spanish Insolvency Act (Law 22/2003, of July 9, 2003 (the “Insolvency Law”).

Following is a summarized overview and description of the subject-matter of the reform, which is by no means intended to be all-encompassing, just to address the main areas that have been amended: the creditors’ arrangement (reorganization plan), the liquidation and other articles related to a greater or lesser extent to both. 

1. Amendments related to the creditors’ arrangement

• 1.1.  Broadening of the allowed terms of the creditors’ arrangement
• 1.2. New majorities regime according to the terms of the creditors’ arrangement
• 1.3.  Specially preferred (secured) creditors: scope of their preferred status and value of their collateral
• 1.4.  Arrangements allowed to be made binding on preferred creditors
• 1.5.  Claim acquired after the insolvency order: broadened rights to vote
• 1.6.  Enforcement by preferred creditors
• 1.7. Specific provisions on insolvency proceedings on concession holders for public works and services, or on the contractors of public authorities

2. Amendments concerning liquidation

• 2.1.  Valuation by the insolvency administrators (or receivers) for the company
• 2.2.  Measures concerning the transfer of the production unit
• 2.3.  Dation in or for payment (payment in kind) of pre-insolvency order claims
• 2.4.  Retention of the brankrupt’s estate
• 2.5.  Amendment of the supplementary rules applicable in the liquidation

3. Other amendments and significant provisions

3.1.  Commencement of the assessment section

3.2.  Pre-insolvency measures and RD-L 5/2005

3.3.  Oversight committee for practices related to refinancing and the reduction of over-indebtedness

3.4.  Limit on the court approval of refinancing agreements

4. Rules for applying the Royal Decree