In 2014, two important amendments to the Insolvency Act were passed which introduced far-reaching changes to the regime which affect the design and objectives of insolvency legislation. In line with the International Monetary Fund and the European Union’s recommendations, these amendments seek to promote the continuance of companies and to avoid the break-up of businesses and job losses due to the fact that the majority of insolvency proceedings end up with the winding up of the companies. With this in mind, Royal Decree-Law 4/2014 of 7 March reformed the refinancing agreements by establishing measures that facilitate debt-for-equity swaps which involve financial creditors with a real guarantee and syndicated loans. Royal Decree-Law 11/2014, of 5 September, on urgent measures in insolvency matters, extends these types of measures to insolvency proceedings and introduces important developments such as creditor classes, in order to join the collective preferential creditors in the resolution of the insolvency as well as to provide a special regime for the transfer of undertakings.
Concepción Ordiz focused on the various issues that the amendment has addressed in relation to public credit. The public-sector creditors, following this amendment, are considered to be a “class” and are going to be able to actively take part in the various solutions directed at rescuing the company. Nevertheless, the amendments have maintained the limitations on making public credit available “outside of the insolvency” and, therefore, within the framework of the pre-insolvency proceedings. On the other hand, the transfer of an undertaking halfway through the insolvency proceedings brings up the question of universal succession and whether or not the new acquirer will have to take on any social security debts. Finally, there was an intense debate on the new special regime applicable to the insolvency situations of companies awarded public services and works concessions and companies outsourced by public administrations. The scope of this regulation has led to doubts beyond those regarding the specific situation for which it was supposedly designed.
Judge Villena focused on new developments and uncertainties which the change has introduced in the creditors’ agreements, most notably in debt capitalisation. A heated debate ensued concerning the solutions to the insolvency and how much specially privileged creditors have to bear. This topic seems to particularly concern SAREB, based on their participation in the debate. The calculation of the majority required for the authorisation of the agreement in the case of syndicated loans was also discussed.
Lastly, Francisco León, who discussed the topic of the transfer of undertakings, highlighted the need to take into account the economic role of the laws in order to be able to adequately interpret the latest changes and to include them in a coherent manner in the insolvency law. He underlined that the biggest impact caused by the latest changes to the insolvency legislation will be in the restructuring of large industrial and service companies.