Publications

Judgment by the Supreme Court (Chamber One), May 22, 2019

For a claim notified out of time not to be classed as subordinate, it must meet the following tests: (i) it must appear in the debtors’ documents; (ii) it must be due and payable; (iii) the fact that it exists and is payable must be beyond doubt; and (iv) it cannot be overlooked by the insolvency practitioner when drawing up the list of creditors by reason of the circumstances of the case.

Definition of fraud concerning the provision of collateral

Judgment by Madrid Provincial Appellate Court, June 21, 2019

In the context of clawback action against financial security under Royal Decree-Law 5/2005 (which was obtained in the context of a refinancing transaction and was suitably consistent with the advantages received), the court ruled against the existence of creditor fraud. If there is no detriment to the insolvent company, there cannot be fraud. The awareness of fraud cannot simply consist of the financial institution’s knowledge of a debtor’s technical insolvency; the financial institution must also be aware that the transaction is not sufficient to refloat the company and even so rely on the transaction to achieve a better position in an unavoidable insolvency scenario.

Provision of collateral during performance period of the creditors’ arrangement does not alter classification of a claim in a subsequent liquidation

Judgment by Pontevedra Provincial Appellate Court, July 23, 2019

The granting of a mortgage in the performance phase of a creditors’ arrangement to secure the deferral of a claim cannot alter the claim’s classification or allow, if the company enters the liquidation phase, the secured claim to be enforced separately or the claim to be paid out of any amount obtained from realization of the mortgaged asset.

DGRN interprets how article 155.4 LC should apply in the performance phase of the creditors’ arrangement

Decision of the Directorate-General of Registers and the Notarial Profession (DGRN), August 6, 2019

The dation for payment of a mortgaged property in favor of a secured creditor made after approval of the creditors’ arrangement must satisfy the requirements in article 155.4 LC, because this article is applicable until the insolvency proceeding has ended with a decision declaring full performance of the creditors’ arrangement.

Inclusion of NOLs in insolvent company's inventory

Judgment by Burgos Provincial Appellate Court, September 11, 2019

Claims in respect of net operating losses (NOL) should not be included in the inventory of assets available to creditors, unless the insolvent company expects to obtain future taxable income allowing those losses to be offset, something that is unlikely if the company is on the road to liquidation.

Action for declaration of a claim in an insolvency proceeding is governed by Insolvency Regulation

Judgment by the Court of Justice of the European Union (CJEU), September 18, 2019

Action taken to obtain a declaration that a claim exists for the purposes of its registration in insolvency proceedings does not fall within the scope of Regulation 1215/2012 (Brussels I Regulation), instead within that of Regulation 1346/2000 on insolvency proceedings (predecessor of the currently in force Regulation 2015/848). The CJEU also held that, although Regulation 1346/2000 requires indication of the date the claim arose, it will not be necessary to do so where the law of the member state of the opening of the proceedings does not lay down this requirement, on condition that the authorities of that state consider the date may be inferred without particular difficulty from the supporting documents under Regulation 1346/2000.

Breach of the creditors’ arrangement due to failure to pay the tax agency even though the latter failed to inform of its bank account

Judgment by the Supreme Court (Chamber One), October 1, 2019

Failure to pay an unsecured claim held by the tax agency is a ground for breach of the creditors’ arrangement, and the debtor cannot defend itself by arguing that the arrangement stated that failure to inform of the bank account determined the discharge of past-due payments, because public law sets out the specific method of payment for that public creditor's claims.