Restructuring and Insolvency Newsletter - April 2021
Madrid’s commercial courts approve their good practice guidelines for sales of productive units in insolvency proceedings
On January 22, 2021 Madrid's commercial court judges approved a set of agreed procedures for handling insolvency proceedings in which liquidation is requested together with the insolvency order, as well as a number of criteria for transfers of productive units in these and other insolvency processes.
Barcelona’s commercial court judges agree on basic guidelines for fast-track sales of productive units
On January 20, 2021, Barcelona's commercial court judges approved a number of basic guidelines for handling Spanish pre-pack insolvency processes, designed to secure quick preparation and performance of sales of businesses or sets of assets affected by distressed situations.
Among other measures, it introduces the new role of silent administrator, an independent expert who will later be appointed insolvency receiver if an insolvency proceeding is commenced and has the main task of overseeing the preparation, during the pre-insolvency phase, of transactions for sale of the business or set of assets.
For further information see our related commentary.
Insolvency moratorium is extended until December 31, 2021 and further economic and procedural measures are approved
Royal Decree-Law 5/2021, of March 12, 2021, on measures to support the solvency of businesses in response to the COVID-19 pandemic, contains alongside various lines of action with an economic aim a number of updates to insolvency legislation.
Most notably an extension of the suspension of the duty to petition for an insolvency order until December 31, 2021 and the suspension, until that same date, of the handling of petitions for mandatory insolvency proceedings filed by creditors since March 14, 2020.
It has also extended until December 31, 2021 the option to file proposed modifications to arrangements with creditors and to court-sanctioned refinancing agreements, as well as a suspension of the debtor’s duty to request liquidation when it becomes aware that the approved arrangement is impossible to fulfill and on condition that it files a proposed modification to the arrangement which is admitted for consideration within that time limit.
For further information see our related alert.
Judgments of interest
- Suspension of special shareholders’ meeting until insolvency receiver’s appointment and acceptance of that appointment
- Territorial jurisdiction to hear an insolvency proceeding is determined by the debtor’s center of main interests not by its registered office
- Appointment of silent administrator in the pre-insolvency phase to prepare sale of debtor’s productive unit
- Appointment of a silent administrator to prepare the sale en bloc of the productive units of a group of companies
- The purpose of the pre-pack insolvency process is to bring forward the preparation of a sale process for a productive unit, so it is not useful for transferring the debtor’s isolated assets
- Modification of a court-sanctioned refinancing agreement before a year has run from when it was sanctioned (under the COVID-19 legislation)
- No standing for debtor’s shareholders to challenge court sanctioning of its refinancing agreement
- Subordination of shareholder's claim derived from exercising right of withdrawal before the insolvency order
- In a court homologation process for refinancing agreements the existence of a disproportionate sacrifice cannot be assessed beforehand
- Value given is presumed for collateral provided by companies in a same group simultaneously with the provision of loans to other companies in its group
News, publications and events
- Legal 500 directory gives highest recognition to the Garrigues Restructuring and Insolvency Department
- Adrián Thery speaks at session organized by FIDE on the legal frameworks governing insolvency in Spain and in the US
- Adrián Thery is panelist in webinar hosted by Garrigues on the pre-pack insolvency process and the sale of productive units
- Adrián Thery and Andrés Gutiérrez speak at seminar organized by the Garrigues Chair on the subject of the supreme court judgment regarding the right of withdrawal and classification in insolvency proceedings
- Adrián Thery moderates at FIDE conference session on the pre-pack procedure at Barcelona’s commercial courts
- Diego Armando Venturoli gives talk in webinar on current insolvency law issues
- Carlos Lama speaks at conference on pre-insolvency processes and refinancing agreements in Spain
- Adrián Thery publishes article in legal blog Almacén de Derecho on conflicts of interest and refinancing agreements
- Juan Verdugo and Jose Manuel Fariñas publish article in latest issue of Revista de Derecho Concursal y Paraconcursal on assignment of contracts in transfers of productive units
- Garrigues publishes new issue of newsletter on the current status of the NPL and REO markets in Latin America, Spain and Portugal
- New insolvency and restructuring journal released by publisher Iustel
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