In the following informative note, we address the Royal Legislative Decree 1/2020, of 5 May, that approves the redrafted text of the Insolvency Law, and revises its structure and key characteristics.
Insolvency or bankruptcy, take place when a company fail to pay their debts. Insolvency declaration leads to a bankruptcy proceeding. Corporate restructuring takes place when a company encounters a difficult situation and management decides to change the outer and inner structure and direction of the company.
The state of insolvency obliges companies to apply for the insolvency proceedings. We analyse some facts that can help to identify this status, as well as the most commonly used accounting formulas to predict it: the acid test and the Altman Z-score.
The Bankruptcy Law in Spain regulates the basic aspects and the deadlines within which companies should apply for bankruptcy when their situation does not allow them to fulfil their payment obligations on a regular basis.
We analyze the numerous judgements of the High Court regarding the existence or not of transfer of undertaking when a company acquires a productive unit of another company in the liquidation phase of the insolvency proceedings.
In Spain, the Insolvency Law provides for the processing of express insolvency proceedings for those companies with no assets nor properties (or that are of a residual nature), with the corresponding savings in time and costs that ordinary insolvency proceedings would normally entail.
In times of crisis, companies may find themselves in a legal cause for dissolution. In this article, we analyse when they should initiate a bankruptcy proceeding and when they should opt for the dissolution and liquidation of the company.
During the insolvency proceeding, the so-called ‘Sixth Section’, if opened, will determine whether or not the bankruptcy is negligent, as well as the liability of the company directors. We analyse if it is possible to attribute this liability to the parent company.
Articles 61 and following of Law 22/2003 provide for the effects of the termination of contracts in the context of bankruptcy proceedings in Spain. The law grants different mechanisms to the parties to guarantee the survival of the bankrupt company and the right of debt recovery of its creditors.
Following the decree of the State of Alarm, the Spanish Government has approved a package of measures on labour Law (by easing the suspension of employment contracts) and insolvency Law, in order that companies can better cope with their lack of liquidity.
Royal Decree-Law 8/2020 introduces changes to the deadlines for applying for bankruptcy proceedings in Spain, whether voluntary or necessary. It also empowers the judges to reject applications, up to two months after the end of the state of alarm.