Vol 17 (2020) - Issue 4

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The Spanish Insolvency Reaction to COVID-19

Synopsis
On 17 March 2020 and in the context of the COVID-19 pandemic, Spain was one of the first countries in the world to adopt insolvency-related measures. The first measure consisted in suspending the obligation to petition for insolvency during the state of emergency in Spain.

Nonetheless, due to the duration of the state of emergency, initially foreseen for two weeks but finally extended until 21 June, the first set of measures was substituted by a second set of measures on 28 April 2020.

Certain insolvency-related obligations (such as petitioning for an insolvency proceeding or for winding up) have been suspended in Spain in order to grant an extra time to Spanish companies to comply with their payment obligations. The rationale is to avoid a massive amount of insolvency proceedings in Spain.

Besides, extraordinary third chances (such as the rearrangement with creditors) are allowed, the regime for refinancing agreements is eased, fresh money from especially related persons is incentivised, and certain procedural measures tend to temporarily eliminate certain formalities within insolvency proceedings in Spain. The most relevant Spanish measures are explained below.