The current economic recession has been particularly acute in one of the pillars of the national economy, the construction and real-estate sector. This sector, which had already been undergoing a slowdown in recent years following the so-called “real-estate boom”, now stands in a profound and particular crisis with sales coming to a standstill, caused not only by the overall market situation, but mainly due to the restrictions placed by banks on loans, which are putting an economic brake on entrepreneurs.  

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.

On 13 December 2008 the official Spanish government gazette, “Boletín Oficial del Estado” published the Spanish “Real Decreto- Ley 10/2008” of 12 December, which sets out financial measures intended to improve the liquidity of small and medium sized enterprises, and other complementary economic measures.  

A claim filed by insolvency practitioners requesting the termination of contract of payment in kind, which was entered into between a party under insolvency proceedings and a third party, centred on the giving of a slicer machine in consideration of debt; whether the credit of the defendant was qualified as subordinated as a result of damages resulting from the company’s inability to operation, and for violating the principle of equality among creditors.

In its decision dated November 13th 2007, Madrid’s Provincial Court accepted the appeal against a decision delivered by Madrid´s Mercantile Court (number 6), which denied the adoption of civil precautionary measures, which were requested together with an action for joint and several liability against the administrators of Afinsa.

The precautionary measure requested was the preventive freezing of assets from the administrators in order to prevent possible concealment actions.

Just six months after the last reform of the Law on Insolvency (Royal Decree-Law No. 4/2014 of 7 March) the Council of Ministers has promulgated a new amendment of the law with a view to facilitating, as far as possible, the continuity of financially viable businesses that become involved in insolvency proceedings.

These changes have been introduced by way of Royal Decree-Law No. 11/2014 of 5 September 2014 (the “Royal Decree-Law”).

As a consequence of the current situation of economic crisis and the sudden braking in construction, we observe that every day we are finding ourselves with fresh news of negotiations with financial institutions, and applications for declarations of bankruptcy from creditors.

Supreme Court Judgment dated 10 March 2016 (STS 151/2016)

The judgment of the Supreme Court analyses the objective scope of extension of the liability for obligations and debts for which, as appropriate, the director of a company should be liable and, more specifically, the scope of "the corporate obligations subsequent to the occurrence of the legal ground for dissolution".

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.

Judgment of the Supreme Court, Chamber One, Number 134/2016, 04 March