Common Measures for Collective Agreements in Spain

The cessation of the singular execution of properties necessary for continuing a professional or business activity is expected from the time the court receives notice that negotiations have begun with creditors. The cessation continues for a maximum period of four months from the initial communication from the debtor with the court. The objective is to permit the negotiations of agreements to come to fruition and ensure that no accumulation of singular executions occurs on the part of creditors who are unwilling to negotiate.

Cessation of Execution

Once the refinancing agreement receives approval, the initiation of singular executions or real guarantees may occur (or, where appropriate, prompt the bankruptcy proceedings of the debtor) if a court were to declare a breach of the refinancing agreement. This measure equates the period of singular execution to the agreed waiting time in the refinancing agreement (except where a previous breach of this agreement has occurred), which is essential for the agreed waiting time to be effective in practice.

The Approval Procedure Process

As proceedings develop, the following is important to note:

  • The cessation of singular execution will operate from the time when the application for approval is accepted for processing until agreement on it (not just for one month, as before).
  • The judge only has a period of 15 days to issue his or her decision of approval, and it is limited to verifying the concurrence of the foreseen majority for official approval (in addition to other formal requirements) and the effects comparable in each case.
  • A disproportionate sacrifice will not receive official review; however, the non-participating or dissident creditors who decide to contest the resolution of agreement will have to invoke it.

This article is not considered as legal advice

Advice on Insolvency Proceedings in Spain

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