BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN SPAIN] 97
KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER SPANISH LAW I. INTRODUCTION -REGULATION OF INSOLVENCY OF COMPANIES AND INDIVIDUALS.
reduced in terms of time and costs. Having said the above, in the following sections we will first analyze the general procedure, applicable to all individuals and legal entities that are not considered as "Micro-companies", including the so-called pre-bankruptcy law. We will refer later to the most relevant aspects of this regulation in relation to individuals. And, finally, we will analyze the special procedure contemplated for "Micro- companies". II. OF THE GENERAL INSOLVENCY PROCEEDING The insolvency proceeding is regulated by a system of phases, with a first phase called "Common Phase" (Fase Común), and two subsequent phases depending on whether the debtor is viable or not. If the debtor is viable, it will enter the so-called "Agreement Phase" (Fase de Convenio), and if not, the "Liquidation Phase" (Fase de Liquidación). Likewise, in parallel with the processing of the previous phases, the Law regulates the so-called "qualification of the insolvency proceedings", the purpose of which focuses on analysing whether the insolvency situation has been caused or aggravated as a result of the guilty or negligent actions of the directors. Regarding pre-bankruptcy law, we will see the so-called "Restructuring Plans". II.1. Commencement of the insolvency proceeding: declaration of insolvency and effects. II.1.1. Initiation of the procedure. From a subjective point of view, any
We believe that the opportunity to present this article comes at a perfect time as an important reform of insolvency regulation has recently entered into force in Spain. This regulation is contained in a single text, Royal Legislative Decree 1/2020, of May 5, which approves the revised text of the Insolvency Law (" TRLC ") which was recently amended by Law 16/2022, of September 5. The aim, as stated in the preamble, is to preserve business and the underlying employment, for which purpose the law distinguishes between the insolvency proceeding per se, and what it calls pre- bankruptcy proceeding, which allows the insolvency situation to be dealt without the need to become immersed in the judicial procedure what is the insolvency proceedings. It should also be noted that after two years of application of the amended referred (by Law 16/2022), it seems that the introduction of pre-bankruptcy proceeding has achieved the desired objective of saving profitable companies with financial difficulties by approving debt restructuring plans with their creditors, mostly financial creditors, and avoiding bankruptcy proceedings. Before going into the most relevant aspects of the regulation, we must take into account that the last reform referred to above has introduced a specific procedure for the so- called "Micro-companies", which are those companies or individuals that, because they comply with certain parameters, the law understands that they must be subject to a special procedure due to their smaller size,
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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