Assessment of the first year of implementation of the Spanish insolvency reform
Company restructuring
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November 21, 2023

Act 16/2022, of September 5, amending the consolidated text of the Insolvency Act (“Act 16/2022”), entered into force on September 26, 2022. It brought about a complete overhaul of the Spanish insolvency system, particularly with regard to pre-insolvency instruments. The purpose of the reform was to provide a “toolbox” to facilitate pre-insolvency restructuring. Under the new regime, creditors enjoy a more prominent role and benefit from more agile and flexible pre-insolvency instruments—including the possibility of cramming down all types of creditors and the debtor company’s shareholders. For more detail, please refer to our document: Key issues of Spanish insolvency reform.

One year after the entry into force of Act 16/2022, it is time to take stock. This guide presents the main milestones in the interpretation of the new pre-insolvency restructuring regime in light of the court rulings on certain transactions. We have analyzed 21 restructuring plans, including the main plans negotiated in Spain during this first year of implementation of the reform.

Main conclusions

  • Restructuring plans have been predominantly triggered by current or imminent insolvency, with little recourse to the “likelihood of insolvency.”
  • Debtors do not always notify the opening of negotiations in the context of restructuring plans.
  • While it is normally the debtor who files the restructuring plan, creditor applications may increase in the wake of certain relevant cases.
  • In competing plans for the restructuring of the same debtor, the solution has been the prior in tempore rule.
  • Highly negotiated consensual plans have prevailed.
  • Joint restructuring plans are a widespread practice.
  • There is an ongoing debate on how creditors and claims are affected by restructuring plans.
  • Class formation is confirmed as a central element of restructuring plans.
  • The figure of the restructuring expert has been one of the most developed issues in practice.
  • Numerous restructuring plans have resorted to debt capitalization.
  • It has been common to negotiate interim and new financing.
  • It is still too early to assess the impact of litigation that will be associated with restructuring plans.

We hope that this work will help interpret the rules and advance the knowledge of restructuring law—which has developed to an outstanding level of sophistication in recent years. The Cuatrecasas team of lawyers specializing in Restructuring, Insolvency and Special Situations will continue to deepen the study and practical application of pre-insolvency instruments in Spain with the firm intention of playing a central role in the development of our pre-insolvency law, as reflected in this guide.

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November 21, 2023