New criteria set out by the Bank of Spain will have a binding nature for supervised financial entities

Introduction

On 30 April 2013 the supervisory body of the Bank of Spain sent a formal communication to the financial entities subject to its supervision containing the criteria to be used with regard to the definition, documentation, follow-up and review of credit refinancing and restructuring transactions (the Communication).

The Spanish Council of Ministers has approved the Royal Decree Law 24/2012 (the RDL 24/2012), for the restructuring and termination of Spanish credit entities. This RDL entered into force on 31 August 2012.

In line with the trend of the first reform to the Spanish Insolvency Act of 2003 carried out on March 2009 (the 2009 Reform), new amendments to the Spanish Insolvency Act (the SIA) were approved on 4 October 2011 (the Amendment). This Amendment will enter into force on 1 January 2012.

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Recent piece-meal amendments to the Spanish Insolvency Act 2003 seem to have cumulated into a restructuring solution that is starting to be considered predictable, quick and fair, especially when compared to the pre-amendment system. With its new restructuring approach, which shares many of the same characteristics as an English Scheme of Arrangement, Spanish companies have finally been given much-needed space and time to develop an appropriate restructuring strategy.

The change provides clarity regarding the pledges over credit rights, restoring pledges as effective and efficient security interests.

The new measures seek to overcome the expected high rate of insolvency, refinancing, and corporate disputes arising from the COVID-19 crisis

Llamo la atención sobre las dos cuestiones enunciadas, que tienen una indudable relevancia práctica en relación con los recursos extraordinarios:

The new company shareholders, who have accessed ownership of the securities by ordinary purchase or by enforcement of a pledge of securities, must beware above all of the hitherto dormant claims of former shareholders and directors.

Article 92 of the Spanish Insolvency Act (SIA) sets forth that claims held by related parties shall qualify as subordinated in the event of insolvency of the debtor.