The reform of the Bankruptcy Law

On September 26, 2022, the new Bankruptcy Law came into force, which transposed Directive (EU) 2019/1013 of the European Parliament and of the Council of June 20, 2019. The main objective is to improve the regulation of the Spanish insolvency system.

El equipo ETL ILIA tiene la experiencia y está preparado para encontrar ese punto de equilibrio que pueda dar solución a tu situación de insolvencia, así que puedes contactar con nosotros para asesorarte sobre cualquier medida expuesta, y en general, sobre cualquier cuestión relacionada con la regulación concursal.

Among the main novelties, the following stand out:

1. The Restructuring Plans

• This mechanism offers companies and their creditors the possibility of restructuring the company in a very flexible way, in the sense that it allows them to adopt all the options that can be imagined: capitalize debt, reduce capital, change the administrative body, spin-off business branches, merge companies or activities, reach take-and-hold agreements.
• The Restructuring Plan contemplates the intervention of the Restructuring Expert, who may intervene when requested by the debtor or the creditors representing more than 50% of the liabilities.
• In the regulation of this aspect, the new legislation introduces a significant paradigm shift in Spanish legislation, and that is that the legal norm gives an important pre-eminence to the creditors, even above that of the company’s partners, because understands that an insolvent company’s share capital deserves less protection than that which its creditors may deserve.
• It remains to be seen how the practical application of this paradigm shift, undoubtedly one of the keys to the reform, will take shape.

2. Special Procedures for Microenterprises

• Micro-enterprises will be those with less than 10 workers with an annual turnover of less than 700,000 euros or a liability of less than 350,000 euros.
• This procedure consolidates the pre-bankruptcy and bankruptcy procedures so that micro-enterprises cannot plant a Restructuring Plan in the same way that companies that are not “Micro” do, which does not mean that they cannot be restructured, but that the procedure will be different
• In this process, you can opt for liquidation or continuity, in a procedure similar to the current conventional solution.
• The special process for micro-enterprises provides for an online settlement and payment plan calculation platform, among other mechanisms, for which the law provides for its entry into force on January 1, 2023.

3. The Express Contest

• The regulation of this figure improves substantially because now it is easier for creditors to demand that the situation of the insolvency be examined before a possible file. However, for this, they must also assume some charges.

4. The second chance

• At this point, the procedures have been facilitated because the old out-of-court payment agreement has been eliminated, and now it is possible to directly request bankruptcy proceedings for a natural person who wants to access a second chance.
• Another important novelty is that the debtor can keep his home, which already happened before thanks to the interpretation of the old regulations made by the judges. Now, this possibility is regulated by law and its treatment is improved.
• In addition, in the new regulation, the Tax Agency and Social Security have special treatment, so that the release of debts with these organisations is significantly restricted. Even under certain conditions, debts with these organizations can prevent access at a second chance.

The new regulations in many aspects pose far-reaching advances, so it will take some time for the practical application criteria to be securely established, and, as always, the correct balance will be found at the midpoint to achieve an adequate solution to each insolvency situation.

The ETL ILIA team has the experience to find that balance point that can provide a solution to your insolvency situation, so you can contact us to advise you on any exposed measure, and in general, on any question related to bankruptcy regulation.