Publications

A provision out of assets available to creditors as injunctive relief for holder of contingent claim must actually be material

Decision by Barcelona Provincial Appellate Court on April 3, 2018

Injunctive relief adopted under art. 87.4 LC, consisting of a provision amounting to 90% of the insolvent debtor’s cash and liquid assets while a decision is reached on the existence of a creditor’s contingent claim, is not simply a book provision but an actual provision. Therefore that percentage of the cash and liquid assets available for the payment of unsecured creditors must be set aside (although this cannot prevent the payment of post-insolvency order claims and privileged claims).

A deed in lieu can be clawed back in an insolvency proceeding even in pre-insolvency period if it implies unjustified detriment to assets

Judgment by the Supreme Court (Chamber One) on March 7, 2018

The insolvent debtor made a deed in lieu to a creditor after notification of its technical insolvency to the court (pre-insolvency). Chamber One at the Supreme Court concluded that a deed in lieu can be clawed back in an insolvency proceeding, irrespectively of whether it was made in the pre-insolvency period (article 5 bis LC), if it implies an unjustified detriment to assets. This detriment is determined according to the value of the assigned rights with respect to the paid claim, the nature of the claim and the status of the creditor that held it. In this case, despite being made a few weeks before the insolvency proceeding, the deed in lieu did not cause an unjustified detriment, and therefore the clawback action was dismissed.

The DGRN ends uncertainty over procedure for appointing insolvency mediator in out-of-court payment agreements

Instruction by the Directorate General for Registries and the Notarial Profession on February 5, 2018

Commercial registrars and notaries will obtain the particulars of the insolvency mediator allocated under the roster system for their appointment. If they fail to accept the appointment, the mediator will be placed at the end of the list. The mediator will have to receive information on the debtor, the creditors and an estimate of the debts and assets to be able to assess whether there is a ground for recusal from accepting the appointment. Only after acceptance has been given will they receive the whole case record. The Public Insolvency Register must receive only the certificate or copy of the minutes of the opening of negotiations with the identity of the debtor, the dates of petition for, and opening of, the proceeding, and the mediator’s identity and date of acceptance.

Acquiring a business unit of a company in insolvency under pre- RDL 11/2014 wording does not shift liability for its social security debts

Judgment by the Supreme Court (Chamber Three) on January 29, 2018

The fact of acquiring a business unit of a company in insolvency under the previous wording of RDL 11/2014, of September 5, 2014 does not entail a transfer of its social security debts to the transferee. The Spanish social security authority cannot shift to the transferee any liability for debts before the acquisition, due to being against the pars conditio creditorum principle. The reform of article 149.2 LC introduced by RD 11/2014, of September 5, 2014, was not interpretative but substantive, and therefore an authentic amendment of the previous legislation has taken place.

When a shareholder exercises their withdrawal right they cannot be deemed a ‘specially related person’ to the debtor (insider)

Judgment by A Coruña Provincial Appellate Court on January 15, 2018

As soon as a shareholder exercises their withdrawal right, they forfeit shareholder status and so cannot be deemed a ‘specially related person’ to the insolvent company, therefore their claim is unsecured and will not be subordinated. But even if their shareholder status were deemed to continue to exist, the claim concerned would not come from a loan or have a similar aim (financing), nor would there be reasons for subordinating it (article 92.5 LC). If the shareholder’s claim resulting from exercising their withdrawal right from the company is awaiting a court decision, it will be contingent (due being disputed) and have the characteristics of an unsecured claim.