The Council of Ministers has approved a Royal Decree Law (RDL) on Urgent Measures in Bankruptcy Matters whose objective is to facilitate agreements that allow the survival of companies that enter into a bankruptcy process. The standard completes the measures already implemented for the pre-bankruptcy phase and seeks to solve some shortcomings and problems detected in the bankruptcy phase. Specifically, a better gear is established between the bankruptcy agreement and the refinancing agreements and the legal obstacles to the sale of companies or productive units without charges are eliminated.
The deficiencies in the Spanish bankruptcy process have caused that in 2013, 95% of the companies declared bankrupt ended in liquidation. This percentage is much higher than in countries around us such as the United Kingdom (80%) or France (70%). The objective of the RDL approved today is to avoid liquidation of companies when they are viable, which was also sought with the reform of the pre-bankruptcy phase (March 2014), giving coherence to the two procedures. It is ultimately about facilitating the process of deleveraging of companies and avoiding the destruction of productive fabric, with the consequent loss of jobs. The standard is part of the National Reform Plan 2014 and includes the recommendations of international organizations.
One of the main novelties of this rule is to extend the possibilities of extending the effects of the agreement to dissident creditors and, in particular, to privileged creditors, depending on the majority voting in favor. Regarding the privileged credits, without modifying their classification, four differentiated classes are created, for the purpose of voting for the extension of the agreement, depending on whether they are labor, public, financial or other creditors. Within the credits with special privilege, this is redefined as 9/10 of the fair value of the good or right on which the guarantee has been constituted, once the preferential debts have been deducted.
Privileged creditors, both general and special, maintain their ability to voluntarily adhere to the agreement, but introduces the possibility that the effects of the agreement may be extended to dissident privileged creditors. The condition is that they vote in favor of the same creditors representing 60% or 75% of the liabilities of each of the aforementioned types of credits (labor, public, financial and other), depending on the measures to be applied.
For ordinary creditors, the existing agreement approval regime is maintained, but the possibility of extending to dissidents, if they vote in favor at least 65% of the ordinary liability, the following measures: Wait between 5 and 10 years; remove more than 50%; conversion of credits into debtor shares or participations, or participatory credits up to 10 years; transformation of debt into any other financial instrument of different characteristics; and assignment of assets or rights in payment of credits, provided that they are not necessary for the continuation of the professional or business activity and that their fair value is equal to or less than the credit that is extinguished or, if it is higher, the difference.
In addition, the creditors with real guarantee, in case of breach of the agreement, can execute their guarantee separately and receive, if covered by the good given in guarantee, the amount of the original debt.
Finally, a mechanism is established to allow the measures of this RDL to be applied, only once, to the conventions adopted under the previous legislation, provided that there are reinforced majorities (higher than those required for the approval of the agreement ) and that a judge approves it. Creditors of public and labor law will be excluded from this provision.
If in spite of everything, the company enters into liquidation, the norm establishes a series of improvements regarding the current procedures. In order to facilitate the transmission of productive units of goods or services of the debtor, three measures are incorporated. First, the transmission of contracts and licenses is allowed without the consent of third parties (counterparts and administration). It also makes possible the transmission of productive units free of pre-existing payment obligations, unless otherwise agreed or provided by law (in the case of salaries and social security obligations). Finally, the sale of productive units with assets given as collateral is allowed, where the consent of the creditor is eliminated, if the acquirer occupies the place of the debtor or if he perceives the value of the guarantee; and, in another case, majorities of drag are anticipated.
On the other hand, the RDL creates a commission to monitor refinancing and debt reduction practices, with functions to monitor the measures adopted by this standard. The Commission will prepare an annual report on the effectiveness of the measures and on the evolution of private sector indebtedness and its macroeconomic implications. Likewise, a telematic portal is established in the BOE with information on the companies in liquidation to facilitate their transfer.
Finally, the RDL addresses the legal modifications necessary to comply with the Judgment of the Court of Justice of the European Union of July 17, 2014, modifying the Civil Procedure Law. Thus, the mortgage debtor may file an appeal against the car that dismisses his opposition to the execution, if it is based on the existence of an abusive contractual clause. This new provision will be applied to foreclosure procedures in which the acquirer had not taken possession of the property. Additionally, a period of one month is foreseen for the procedures in which the deadline for appealing the order that the opposition had rejected was concluded.
