Makes it easier to rescue companies in insolvency and sell them debt-free

Automatic summary, not yet reviewed

1. The value of a guarantee (such as a mortgage) is calculated by subtracting from the value of the asset the debts with priority over it and applying a ten percent discount, to keep privileged credits from multiplying on the same asset.
2. Voting rights at the creditors' meeting are extended to those who bought credits after the insolvency was declared, except for people especially linked to the debtor, who become subordinate creditors without a vote.
3. Selling the business or production units of the insolvent company is made more flexible: the buyer takes over contracts and licenses and, as a rule, is not liable for prior debts, except debts to Social Security or to workers.
4. The ability to bind dissenting creditors to the arrangement is expanded: the previous limits of a 50 % debt reduction and five-year deferrals are lifted if a 65 % majority is reached, and privileged creditors can be bound by majorities of 60 % or 75 % within their own class.
5. A special regime is created for insolvencies of companies holding public works and service concessions or contracting with public administrations, with possible consolidation of proceedings to keep the service running.
6. In liquidation, the judge may withhold up to 15 % of the proceeds of each sale to cover future challenges, and information on companies in liquidation will be published on an online portal to make their sale easier.
7. The Commission for monitoring refinancing and insolvency practices is created. It will monitor how the law works and propose reforms to the Government to make debt restructuring easier for viable companies.
8. Mortgage debtors may appeal the rejection of their opposition to foreclosure when it is based on an abusive contract clause, and 5 % of the social housing fund may go to people evicted over non-mortgage loan defaults.

Who it affects

• Companies in trouble or in insolvency proceedings: They get more tools to refinance debts, approve arrangements and sell the business or production units without carrying over prior debts.
• Creditors, especially banks and financial institutions: The value of their guarantees is capped at the real value of the asset, and they can be bound by the arrangement if reinforced majorities are reached.
• Workers of insolvent companies: Collective layoffs and changes to working conditions are handled by the insolvency court, and their credits and Social Security debts get special protection when the company is sold.
• People evicted from their homes: 5 % of the social housing fund can go to those evicted over non-mortgage loan defaults.
• Public administrations: They can propose arrangements in insolvencies of concession holders and contractors, with consolidated proceedings to keep public services running.

Words worth knowing

Concurso de acreedores

Court process for a company or person that cannot pay its debts, aiming to reach a deal with creditors or sell its assets.

Convenio concursal

Agreement between the insolvent company and its creditors to reduce the debt (quita) or defer payments (espera) and avoid liquidation.

Quita y espera

Quita is the share of the debt that is forgiven; espera is the extra time given to pay it.

Privilegio especial

Priority to collect a credit from a specific asset securing it, such as a mortgage.

Unidad productiva

Set of assets, contracts and staff of part of a company that can be sold as a whole so the activity continues.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries