Overhaul of Spain's insolvency law: restructuring plans and fresh start

Automatic summary, not yet reviewed

1. The law replaces the two existing pre-insolvency tools (refinancing agreements and out-of-court payment agreements) with a single figure: restructuring plans. They let a struggling company negotiate with creditors before reaching insolvency proceedings.
2. A new state is created, the probability of insolvency, which allows action before imminent or actual insolvency. If a debtor expects it cannot pay obligations falling due in the next two years, it can already use these mechanisms.
3. A restructuring plan can be imposed even on classes of creditors or on shareholders who voted against it, as long as certain safeguards are met, such as the absolute priority rule: no one may collect more than they are owed, nor less than they deserve.
4. The fresh start becomes a right for natural-person debtors acting in good faith, whether or not they are business owners. More debts can be discharged and liquidating all assets is no longer required: debtors can choose a payment plan of three years (five in some cases) while keeping their primary home and business assets.
5. A single special procedure is created for microenterprises (fewer than ten workers and under €700,000 in annual revenue or €350,000 in liabilities). It is electronic, with free standardized forms, and offers two paths: a continuation plan or a fast-track liquidation through a public asset sales platform.
6. Creditor insolvency proceedings are streamlined: the early proposal and the creditors' meeting are abolished, deadlines are shortened, and a binding offer to buy production units can be filed with the insolvency petition. The no-asset insolvency is also regulated, with later creditor oversight.
7. Insolvency administrators must pass a professional aptitude exam and will be registered by classes based on case complexity. Their pay is reduced if proceedings are delayed or their work is deficient.
8. The law takes effect twenty days after publication in the Official State Gazette, except for book three (microenterprises), which takes effect on January 1, 2023 because it depends on an electronic platform not yet available.

Who it affects

• Companies and self-employed people in financial trouble: They can negotiate restructuring plans before insolvency proceedings, and microenterprises get a simplified, electronic special procedure.
• Natural-person debtors, whether or not they run a business: They can access the fresh start more easily, even without liquidating their assets, through a payment plan.
• Creditors of struggling companies: They vote by classes on restructuring plans and have safeguards against plans imposed over their objection.
• Workers of insolvent companies: Their labor rights are preserved and some wage claims are strengthened against the insolvency estate.
• Insolvency administrators: They must pass an exam, register by complexity class, and see their pay tied to efficiency and deadlines.

Words worth knowing

Concurso de acreedores

Spanish court proceeding for a company or person that cannot pay its debts, ending in either a deal with creditors (convenio) or the sale of assets (liquidation).

Plan de reestructuración

Agreement between a struggling company and its creditors to change debt terms and avoid insolvency proceedings.

Exoneración del pasivo insatisfecho

The fresh start: the court releases the debtor from unpaid debts if they acted in good faith.

Microempresa

Company with fewer than ten workers and under €700,000 in annual revenue or €350,000 in liabilities.

Créditos de derecho público

Debts owed to the Tax Agency or Social Security, such as taxes and contributions.

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