Vol 14 (2017) - Issue 5

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On Judgment No. 190/2017 of the Spanish Supreme Court (Civil Division): Subordination of Intragroup Claims

Article 92 of the Spanish Insolvency Act1 ('SIA') sets forth that claims held by related parties shall qualify as subordinated in the event of insolvency of the debtor.

Furthermore, Article 93(2)(3) SIA includes in the list of a debtor's related parties, and therefore taints with subordination claims held by, among others: (i) companies that belong to the same group of companies as the insolvent debtor and (ii) its common shareholders, provided that the latter meet the requirement established in paragraph 1 of the same article.

Judgement no. 190/2017 has shed some light on the debate as regards the scope of (i) above (i.e. what is required for the subordination trigger in respect of group companies).