Restructuring and Insolvency Newsletter - October 2020

España - 10 / 05 / 2020

The Recast Insolvency Law came into force on September 1

Legislative Royal Decree 1/2020, of May 5, 2020, approving the Recast Insolvency Law (Texto Refundido de la Ley Concursal or TRLC) was published in the May 7 edition of the Official State Gazette and has repealed among other legislation, the Insolvency Law, Law 22/2003, of July 9, 2003 (LC) along with a few, not all, of its additional and final provisions. Its coming into force does not affect the urgent insolvency and pre-insolvency measures adopted during the COVID-19 crisis.

The main features of legislation in the new law can be read here.

Following the entry into force of the new law, Spanish insolvency legislation will have to be revised again to adapt it the requirements in Directive 2019/1023 of June 20 on preventive restructuring frameworks which all member states are required to transpose before July 17, 2021, unless an exceptional one-year extension is allowed.

Law 3/2020, on procedural and organization measures to confront COVID-19 in the sphere of the justice system came into force on September 20

This law raised Royal Decree-Law 16/2020 to the status of a Law besides including a few important new pieces of legislation on insolvency which may be read here.

Topical Judgments

Contingent claims remain contingent until their exact and final quantification
An administrative concession may be applied for as part of a productive unit if operations continue in the same premises
COVID-19 could be a reason for applying the rebus sic stantibus clause to stay obligations under financing agreements
Creditors who have appeared as parties have standing to appeal assessment judgment contrary to their interests
A judge cannot make up for or complete non-identification of the person affected by the fault-based assessment in the report by the public prosecutor’s office
A claim stemming from a proceeding shifting tax liability has the same classification in an insolvency proceeding as the original claim for the liability that was shifted
A presumption of principal residence in one state for the purpose of determining the center of main interests is not rebutted by ownership of a single property in a different state
Exception to requirement to open assessment section due to existence of a less onerous alternative does not operate where it affects a weak class of creditors
Court appointment of independent expert to supervise search process for investors for the sale of productive unit in a pre-insolvency scenario

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News, publications and events

Iván Heredia publishes two articles on international transfers of claims and security interests in intellectual property in Spain
INSOL Europe publishes a guidance note chaired by Adrián Thery with guidelines for applying Directive on preventive restructuring frameworks
Iván Heredia takes part in FIDE Foundation’s talk on arbitration and international insolvency proceedings
Marina Lorente publishes article on insolvency tools available to help hospitality industry contend with the economic crisis caused by Covid-19
Andrés Gutiérrez participates in joint chairing of eighth edition of insolvency conference
Juan Verdugo speaks at seminar on legal levers for orderly management of the crisis organized by Asociación para el Progreso de la Dirección.
Garrigues and Madrid Bar Association contribute to disseminating the Recast Insolvency Law
Juan Verdugo and Luis de la Peña publish article in 2020 commercial law practice review
Adrián Thery and José Manuel Fariñas publish articles in insolvency journal on productive units
Chapter by Andrés Gutiérrez on corporate governance issues surrounding homologated refinancing agreements published in collective work (Reestructuración y gobierno corporativo en la proximidad de la insolvencia)
Marina Lorente takes part in conference on Second Chance Law organized by Madrid Bar Association
Garrigues participates this year again in managing insolvency forum Foro Concursal de Madrid 2020-2021