Entry into force: in general, on September 26, 2022, with the exception of the third book of the TRLConc ( new special insolvency procedure for micro-companies), and the 11th DA , referring to deferrals and installments of tax debts by the AEAT, which will enter into force on January 1, 2023.
The reform affects many aspects of the first book, completely changes the pre-bankruptcy system in a new second book, and creates a new third book dedicated to the insolvency proceedings of micro-companies.
It seeks to streamline insolvency proceedings in Spain, and to comply with the transposition of the European Directive on restructuring frameworks.
1. Introduction
Last August 25, the Congress of Deputies approved the reform of Royal Legislative Decree 1/2000, which approved the revised text of the Insolvency Law (hereinafter, LCon). The reform was approved by Law 16/2022, of September 5 and was published in the BOE the day after its approval.
The purpose of the reform is the transposition of Directive (EU) 2019/1023, on preventive restructuring frameworks, debt waivers and disqualifications, and on measures to increase the efficiency of restructuring, insolvency and debt waiver proceedings.
In addition, in order to encourage earlier restructuring and contribute to the decongestion of the courts, the reform introduces the so-called restructuring plans.
At the same time, the reform introduces multiple procedural modifications aimed at streamlining the insolvency proceedings, facilitating the approval of an agreement when the company is viable and a quick liquidation when it is not.
Finally, a more efficient second chance procedure has been set up, extending the list of debts that can be exonerated and introducing the possibility of exoneration without prior liquidation of the debtor's assets and with a payment plan.
2. Modifications to Book I of the TRLC on insolvency proceedings.
Anticipation of the end of the common phase. A decree will be issued putting an end to the common phase of the insolvency proceeding, with the simultaneous opening of the liquidation phase within 15 days from the presentation of the report of the insolvency administration.
The deadline for the presentation of the proposed composition is also reduced, which may be presented together with the request for the declaration of bankruptcy or at any time thereafter, provided that fifteen days have not elapsed since the presentation of the bankruptcy administration's report.
Requirements for the registration of the Insolvency Administrator. The requirement of qualification and passing the exam is maintained, but lawyers, economists, business graduates and auditors who can prove previous experience as insolvency administrators are excluded from taking the test.
Substitution of the express termination of insolvency proceedings for the declaration of insolvency proceedings without assets.
The imposition of the cost of the VUP through a Specialized Entity at the expense of the Bankruptcy Administration is eliminated.
Introduction of the possibility of submitting the VUP offer with the application for the declaration of bankruptcy and the appointment of an expert to obtain the offer for the VUP.
Expansion of the scope of application of bankruptcy rescission.
The credits contracted by the debtor during the period of compliance with the agreement will be classified as bankruptcy credits, and not against the estate.
Claims related to the bankruptcy administration's remuneration during the liquidation phase are considered essential for the liquidation.
Abolition of the advance arrangement and the creditors' meeting, replacing it with a written system of adhesions in order to simplify the procedures.
The opening of the sixth qualification section will take place whether the insolvency proceeding goes into liquidation or into composition.
The opinion by the Public Prosecutor's Office is eliminated and is limited to the possible criminal action.
The duration of the insolvency proceeding from the opening of the first section until the closing of the fifth section may not exceed twelve months, although the judge may extend it if necessary due to its complexity or justified circumstances that may arise.
3. Modifications to Book II of the TRLC on corporate restructuring plans.
Public credit. The need to be up to date with tax and Social Security obligations in order for the restructuring plan to affect public credit and for the credits to be less than two years old from the date of their accrual until the date of presentation to the court of the notice of commencement of negotiations.
Foreclosure of public creditors. Non-suspension of executions requested by public creditors due to the communication of restructuring plans. Once three months have elapsed since the communication, the agreed suspension becomes null and void.
Payment schedule for public law receivables affected by the restructuring plan. In general, 12 months from the date of the order approving the plan; in the case of deferment or instalments, 6 months. Payment shall in no case exceed 18 months from the date of communication of the opening of negotiations.
The debtor's failure to comply with the obligation to be up to date with its tax and Social Security obligations constitutes grounds for challenging the order approving the restructuring plans.
Public-law creditors affected by the restructuring plan may request the termination of the plan with respect to public-law claims in the event of default.
4. Modifications to Book III of the TRLC on the special procedure for micro-companies.
Necessary intervention of professionals in this special procedure.
Reduction of the target scope of application to be applied to debtors with an annual turnover of €700,000 or liabilities of €350,000.
