The reform of the Spanish Insolvency Act 

Restructuring plans in Spain
September 1, 2023
On 26 September 2022, the reform of the Spanish Insolvency Act implementing the EU Restructuring Directive entered into force.

The reform represents a major overhaul in the Spanish restructuring framework and a considerable upgrade to the previous restructuring toolkit, bringing it closer to a US Chapter 11 or an English scheme of arrangement with the introduction of concepts such as:

  • class formation;
  • the possibility of cross-class cramdown of existing shareholders and secured creditors;
  • the absolute priority rule;
  • the reverse rule;
  • the "best interests of creditors" test; and
  • the rejection of executory contracts.
This paradigm shift is accompanied by a number of ambitious measures aimed at enhancing the rescue culture and preventing debtors from attempting to detail restructuring proceedings with opportunistic actions. These measures include enabling creditors to present a restructuring plan or to stay an insolvency petition filed by a debtor.

See complete chapter at: Investing in Distressed Debt in Europe. The TMA Handbook for Practitioners, Second Edition. Globe Law and Business, 2023.


September 1, 2023