The extension of the insolvency moratorium in Spain until March 14, 2021, is included in the Royal Decree-Law 34/2020, of November 17, on urgent measures to support business solvency and the energy sector, and on tax matters. Especially with the amendment of paragraphs 1. and 2. of Article 6, and paragraph 3 of Article 3 of the Law 3/2020 of 18 September on procedural and organizational measures to deal with COVID-19 in the Justice Administration field.
- The previous wording of paragraph 1. Article 6 of Law 3/2020 provided for the suspension of the duty to file for voluntary insolvency for debtors in a state of insolvency until 31 December 2020. With the new wording of the paragraph, this period is extended to 14 March 2021 inclusive.
- On the other hand, paragraph 2. of Article 6 provided for the suspension of the judges’ duty to admit any necessary insolvency request submitted between 14 March 2020 and 31 December 2020. This term is also extended to 14 March 2021 inclusive.
- The new wording of paragraph 3 of Article 3 of the Law introduces the suspension of the judges’ duty to admit to proceedings any declaration of non-compliance with the insolvency agreement submitted by a creditor between 31 October 2020 and 31 January 2021, until three months have elapsed since the latter date.
- Finally, there is also an extension to hold partners/shareholders meetings and board of directors meetings by electronic means throughout 2021.
The preamble to Royal Decree-Law 34/2020 states that the extension of these terms targets all the companies that, before the COVID-19 crisis, could meet their economic obligations regularly. However, due to the pandemic, they find themselves in economic difficulties that make it impossible for them to continue meeting said obligations. The purpose of this extension is to preserve the economic continuity of these companies and protect the country’s business and economy.
The objective of the extension of the insolvency moratorium in Spain until 14 March 2021, is, ultimately, to offer a mechanism focused on the continuity of the companies in the current economic context of the pandemic.
For additional information on the extension of the insolvency moratorium in Spain,
This article is not considered legal advice