Spain: Implementing the Restructuring Directive in Spain

Shortly before expiry of the implementation period of the directive, the Spanish government has now filed an application for an extension of the deadline by another year, i.e. until 17.07.2022, with the European Commission.

Notwithstanding the application, the legislature is already working on a reform of the fully revised text of the Insolvency Act (TRLC) that first came into force in September in order to incorporate the new provisions of the Directive into the Spanish legislation.

Particular attention is paid to the debt issuance or the deferral of debts to public authorities, such as the tax authorities or the social security authorities.

The TRLC in its current version expressly stipulates that debts to public authorities are not covered by a residual debt release. Nevertheless, rulings of the provincial courts that declare this provision to be inapplicable and thus extend a residual debt release for this type of debt are piling up. The reason for this is that the previous version of the Insolvency Act still provided the possibility of being exempted from these debts. The courts consider the new regulation to be non-constitutional and are suspending its application. The courts' attitude in recent months led to a wave of lawsuits, as insolvency debtors are trying to be exempted from debts against public bodies by way of litigation. The result was an overloading of the courts.

In order to master this problem and to ensure compliance with guidelines, the legislature is working on a mechanism that should allow debtors to also obtain exemption with regard to debts to public authorities.

A concrete draft proposal does not yet exist. It is also not foreseeable when such a draft proposal can be expected.

Autor: Axel Roth