On 1 January 2012 a reform of the Insolvency Act (the “Reform”) passed by the Spanish Chamber of Deputies on 22 September 2011 came into force.
The Reform does not materially alter the Law 22/2003 on Insolvency (“LI”). Rather it is essentially an attempt to adjust the LI to the current economic climate by encouraging businesses to stay afloat avoiding, as far as possible, their liquidation and closure.
One of the Reform’s major developments refers to the composition and operation of the insolvency administration (“IA”). Generally, the IA is now run by one member alone who may be an individual or a corporation. An exception is made for so-called large insolvencies, where the IA must be formed by two members whose powers are now wider, as they can even apply for the company’s winding up.
The Reform prioritises pre-insolvency mechanisms designed to facilitate debt refinancing or the submission of early arrangement proposals. In this way pre-insolvency now encompasses situations of actual and threatened insolvency.
Also, the Reform sets our rules allowing the joinder of several insolvency cases.
In order to speed up the procedure, the Reform provides that notice of the receivables may now be given directly to the IA, even online. Also, creditors may now be notified the outcome of their claim before the report is released. This is to avoid later procedural issues due to material mistakes. In order not to delay the common stage of the procedure, the Reform discourages applications for an extension of the deadline to release the report. Also, provision is made for the possibility to close the common stage where procedural issues involve less than 20% of the assets or liabilities.
Finally, the Reform asserts the exclusive jurisdiction of the insolvency judge to hear collective dismissal cases, even where these have been initiated prior to the insolvency declaration.