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.
The fumus boni iuris used to justify the adoption of interim measures, involving blocking the enforcement of a financial guarantee, was counteracted since the pledge was fully enforceable under Luxembourg law, which was the governing law.
The parties had agreed to institute a financial guarantee on certain shares owned by the insolvent company and the pledge was made subject to Luxembourg law, because the account where the shares were deposited was located in Luxembourg.
If severe losses and insolvency occur, the directors’ duty to seek wind -up no longer applies if the company files for insolvency and is declared insolvent. While the composition is being carried out, the duty to seek wind-up and the directors’ resulting liability will not arise.
This ruling clarifies the role of the directors’ corporate duties in the event that legal grounds can be attributed to the company for wind-up due to losses, and the obligation to file for insolvency if the company becomes insolvent.
En la SAP de Madrid (secc. 28ª) de 7 de diciembre de 2012 y la SAP de Barcelona (secc. 15ª) de 4 de octubre de 2012 se discutía la calificación concursal de un crédito que había sido calificado por la administración concursal como subordinado por entender que la sociedad acreedora pertenecía al mismo grupo de sociedades que la concursada. En ambos casos las Audiencias realizan un análisis del concepto de grupo a efectos concursales antes y después de la reforma de la Ley Concursal introducida por la Ley 38/2011.
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
Madrid Commercial Court No. 6 order of October 7, 2013: acquirer of a production unit subrogated in employment liabilities because the shareholders and directors had established the company specifically to acquire the insolvent company ("Marco Aldany Case")
The court did not rule out liability for employment obligations because the partners - directors of the insolvent company wished to acquire the production unit through a company created specifically to acquire it.
In 2011, the Spanish legislator introduced the court-sanctioned refinancing agreement (‘Spanish Scheme’) in the Spanish insolvency system. While the introduction of the Spanish Scheme has been praised for providing new tools for debtors to reorganise out-of-court while addressing the collective action problem, certain of its provisions have made this instrument too rigid and, thus, ineffective for tackling Spanish restructurings.
En aplicación del art. 6.3 Cc, se declaran nulas prendas sobre acciones otorgadas por una sociedad en garantía de préstamos para adquirir acciones de la propia sociedad porque vulneran la prohibición de asistencia financiera. No existe obligación de restitución porque la prenda fue concedida con carácter unilateral y gratuito.
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.
On March 18, 2014, the Bank of Spain gave credit institutions consistent criteria to apply the provisions of Circular 4/2004 to restructuring transactions resulting from the refinancing agreements regulated under the Insolvency Act, complying with the stipulations of Additional Provision One of Royal Decree Law 4/2014, which assigned the drafting of those criteria to the Bank of Spain.