In light of the uncertainty caused by the decree of the State of Alarm in Spain, the Spanish Government has approved a package of legal measures to offer liquidity solutions to companies.
Among other measures of a tax, financial, public procurement or customs nature, we highlight those approved regarding labour and insolvency law.
Liquidity solutions for companies: Labour Measures
Undoubtedly, the solutions that have had the greatest importance in recent days are those approved regarding labour law. Mainly:
- Promotion of distance working (remote work) as a priority in the face of the reduction or cease of activities
- Adaption and reduction of hours for those workers that must take care of family members (up to second degree), provided that the situation is justified and proportional in relation to the company, or exceptional situations occur as a result of the epidemic. These measures regarding the adaptation and reduction of working hours may be adopted in multiple ways if they are agreed between the worker and the employer
- Easing of suspension and reduction working contract procedures (ERTES): With the aim of ensuring the maintenance of employment, the procedures for the implementation of ERTES have been relaxed (link 8 2020), whether due to force majeure or for objective reasons.
Liquidity solutions for companies: Insolvency Measures
For companies that, as a result of the decree of the State of Alarm, are unable to regularly comply with their required obligations, the most appropriate option is to resort to insolvency proceedings (this, without prejudice to the necessary study of each individual case).
In this respect, and as long as the State of Alarm is in effect:
- Insolvent companies are not required to formally present insolvency proceedings until two months have elapsed since the termination of the State of Alarm.
At this point, it should be remembered that:
- Requests for involuntary insolvency will not be admitted by the Court during the State of Alarm, nor for the two months following the end of the state of alarm
- Voluntary insolvency proceedings will be admitted by the Court, even if they have a later date.
- Debtors who have communicated the start of negotiations with their creditors to reach an agreement or refinancing proposal shall not be required to file for insolvency.
The adoption of these measures reduce serious liability consequences for company managers in the event that they fail to comply with the deadlines established in Insolvency Law. However, in anticipation of possible insolvency proceedings, the directors of the companies must seek relevant legal advice as soon as possible, in order to comply with their management and administration obligations as soon as the deadlines are reactivated.
To find out additional information about liquidity solutions for your company, do not hesitate to contact us.
This article is not considered as legal advice