Law 3/2020, of 18 September, covers procedural and organizational measures to deal with COVID-19 in the field of the Administration of Justice in Spain. It came into force on 20 September 2020 and is divided into three chapters and 23 articles, introduces adaptations, modifications, and extensions of deadlines, amongst others.
Chapter I – Procedural Measures (Arts. 1-2)
Chapter I of Law 3/2020 regulates measures of a procedural nature. In particular, and until 31 December 2020, some procedures in civil and administrative litigation will have a preferential. For example, the preferential processing of proceedings to contest temporary employment regulation proceedings (ERTEs) due to the causes established in Articles 22 and 23 of Royal Decree 8/2020, of 17 March.
Chapter II – Corporate and insolvency measures (Arts. 3-13)
Through the corporate and insolvency measures included in Chapter II, Law 3/2020 adopts a series of provisions to maintain the economic viability of companies and avoid their bankruptcy. The most relevant measures include:
- Modification of insolvency agreements: The insolvent party will be able to present proposals for the modification of the agreement amendment proposals (during the compliance period) until 14 March 2021, and the judge will not admit any request for a declaration of non-compliance until 31 January 2021. The judge will submit the creditors’ requests to the insolvent party until 31 October 2020, so that the latter can present a proposal for the modification of the agreement between 31 October 2020 and 31 January 2021, that will receive preferential treatment.
- Duty to apply for insolvency proceedings: The debtor is not obliged to apply for insolvency proceedings until 31 December 2020. Likewise, losses for the financial year 2020 will not be considered as cause for dissolution provided for in Article 363.1e) of the Law of Capital Companies.
- Refinancing agreements: Until 14 March 2021 debtors with approved refinancing agreements may modify the existing contracts or negotiate new ones. The judge will submit the requests presented by creditors to the debtor until 31 October 2020 but will not admit them until 30 November 2020, the proceeding being of preferential nature.
- Duty to request the opening of the liquidation phase: The duty to request the opening of the liquidation phase is postponed until 14 March 2021, when the inability to fulfil the committed payments becomes evident and a modification of the agreement is presented and accepted.
- Financing and payment by especially related persons: In all bankruptcy proceedings declared up to 14 March 2022, all loans, credits, etc. granted to the debtor since the declaration of the state of alarm by especially related persons will have the consideration of ordinary credits.
Chapter III: Organizational and technological measures (Arts. 14-23)
Chapter III includes organizational and technological measures in the field of the Administration of Justice. Law 3/2020 extends over time some of the measures adopted during the state of alarm to maintain the courts functioning:
- Holding of procedural acts by preference through the telematic presence of the parties involved. There is an exception for criminal justice, regarding felony trials
- There is an exception for criminal justice regarding felony trials
- Broadcasting hearings through telematics image and sound systems
- Restrictions on in-person public service until 20 June 2021, albeit it will be provided by videoconference, telephone, or email.
Provision planning of judicial bodies with exclusive jurisdiction over proceedings associated with COVID-19.
In conclusion, Law 3/2020 of 18 September 2020, on procedural and organizational measures to deal with the COVID-19 in the field of the Administration of Justice, establishes relevant provisions in the area of insolvency. Its purpose is to avoid insolvencies by extending deadlines and introducing nuances and new aspects. The measures will also help the courts to deal with the new normal.
Fiona Tamm & Saphira Mouzayek
This article is not considered legal advice