The impact of COVID-19 is yet to be fully realized, and many companies are yet to consider restructuring as a means to survive the pandemic, but all companies and all creditors can benefit now from learning how employee matters are treated in a bankruptcy proceeding under chapter 11 of the U.S. Bankruptcy Code (as amended, the Bankruptcy Code). This blog provides a high-level overview of some of the most material matters affecting an employee workforce in the context of a chapter 11 restructuring.

The recent reform of the Bankruptcy Act (operated under RD 11/2014 dated September 5, 2014) intended to extend the bankruptcy agreement modifications in favor of the pre-insolvency restructuring and refinancing agreements which were introduced in March 2014.

The reform has a special provision for privileged creditors with warranties subject to specific valuation formulas, to be adjusted to the actual financial value of the guaranteed credit. Any portion of debts that exceed this value will not be considered as privileged, but will be ordinarily classified.

The Spanish Supreme Court has established the legalconcept of insolvency as an objective requirement forthe Declaration of Insolvency pursuant to Section 2.1 ofthe bankruptcy Act by virtue of the decision taken by the Court on April 1, 2014.

Introduction

Introduction

Introduction

Introduction

Introduction

Introduction

Introduction