Significant developments have taken place in the Spanish insolvency legal framework during 2014, focusing mainly on these areas:

1
REFORM OF THE INSOLVENCY ACT: Royal Decree-Act 11/2014
(passed on 5/9/2014; in force since 6/9/14)
WHO DOES IT AFFECT? HOW?
DEBTORS

Este comentario tiene la finalidad de avanzar en el diálogo recíproco iniciado con las propuestas de interpretación de los jueces de lo Mercantil de Madrid sobre las nuevas reglas de calificación culpable del concurso (Acuerdo de 7 y 21 de noviembre del 2014).Análisis GA&P | Enero 2015 1 1.

The Madrid Senior Commercial Judges have published the conclusions of the meetings held on November 7 and 21 on the unification of applicable criteria of the reforms of the Insolvency Act enacted by Royal Decree-Law 11/2014¹⁵ and Act 17/2014.¹⁶

A composition agreement was approved involving the merger of some of group’s companies and with different alternatives, one of which is specifically designed for financial institutions, but open to all creditors, proposing a partial capitalization of the insolvency credits and the payment of the resulting credits through the realization of certain assets and the free cash flow generated by the company in the coming eight years.

Claims secured with an in rem guarantee continue to accrue default interest charged to the encumbered asset and are classified as privileged.

First decisions on the court-sanction of refinancing agreements and extension of effects to dissenting entities under the new text of the Fourth Additional Provision, and analysis of the concept of disproportionate sacrifice when there is opposition to the agreement

The Madrid Provincial Court applied the doctrine of the Supreme Court judgment of April 30, 2014, no. 100/2014⁸, and declared the rescission of a personal guarantee granted by the insolvent company to secure the loan granted by a credit institution to a related company.

On October 1, 2014, the Official Gazette of the Spanish State (“BOE”) published Act 17/2014, on urgent measures for refinancing and restructuring corporate debt (“Act 17/2014”).  This  act  arises  from  Royal  Decree-Law  4/2014,  of March 7³ (“Royal Decree-Law 4/2014”), which was approved by the Spanish Congress of Deputies and subsequently processed as a draft bill through the urgent procedure.

When an composition agreement is terminated due to  non-fulfillment and the disappearance is declared of its effects over the credits, the affected credits will be recognized for their original amount, and the definitive texts will include the fraction pending of payment, even if the resulting amount after applying the debt relief agreed has been paid in full