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Amendments introduced by law 14/2013, of 27 september, on support for entrepreneurs, to the Spanish insolvency regime

Amendments introduced by law 14/2013, of 27 september, on support for entrepreneurs, to the Spanish insolvency regime

On October 18, 2013 entered into force the new amendments introduced by Law 14/2013, of 27 September, on support for entrepreneurs (hereinafter, the “Law”) to the Spanish insolvency regime set out in Act 22/2003, of 9 July on Insolvency (hereinafter the “Insolvency Act”).

The Law modifies some legal requirements referred to the refinancing agreements and introduces a new procedure out of court as an alternative to the insolvency proceeding.

This article attempts to highlight some of the main measures introduced by the Law on the Spanish insolvency regime:

  1. Refinancing agreements

a) Judicial approval

Pursuant to the fourth additional provision of the Insolvency Act which provides the judicial approval of the refinancing agreements for its implementation to all other non-participating and dissenting creditors, the Law reduces the percentage of the support of the creditors representing the liabilities owed to the financial entities needed for its judicially approval.

Instead of the support of creditors representing at least 75% of the liabilities owed to the financial entities, it would be sufficient with the support of at least the 55% of the liabilities owed to these creditors.

b) Independent experts

The Law clarifies the regime for the appointment of the independent expert who issues the report about the viability of the debtor.

Before this amendment, the independent expert was appointed by the competent Commercial Registrar at its own criteria. The Law introduces a new article 71 bis on the Insolvency Act which sets out a more detailed set of provisions relating the appointment of the independent expert.

  1. Out of court payments agreement

The Law introduces a new Title X on the Insolvency Act in order to regulate a new proceeding that consist on the possibility of negotiate a payments plan with creditors as an alternative to the insolvency proceeding and to the refinancing agreements.

The main points of this new procedure are the following:

  • It is not available to debtors who are negotiating a refinancing agreement or whose declaration of insolvency has been admitted by the court.
  • The debtor may be (i) a natural person with liabilities which do not exceed of five million Euro or (ii) legal entities with fewer than 50 creditors or assets and liabilities which do not exceed of five million Euro.
  •  Public claims and secured claims cannot be affected by the agreement.
  • The payments plan will be negotiated and managed by the “mediator”, appointed by the Commercial Registrar if the debtor is a legal entity subject to be registered; otherwise the mediator will be appointed by a Notary.
  • Once the commencement of the procedure, the debtor may not request the granting of any credits or loans.
  • The mediator may request the declaration of the insolvency proceeding in the event that (i) the payment plans is not approved, (ii) the debtor breaches the agreement or (iii) the payments plan is rendered void. In this scenario, a special insolvency proceeding will be declared: the liquidation phase would be simultaneously opened.
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