November 20, 2017

November 20, 2017

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November 17, 2017

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A Critique from Spain of the Proposed Insolvency Directive

The EU directive 2012/30/EU proposed in November 2016 (“Proposed Directive”) aims to avoid the adverse effects of insolvency on companies through a more flexible regime of restructuring.

The Proposed Directive develops the concept of “second chance” and enhances insolvency proceedings to make them more effective. Examples of the enhancement include the early warning and pre-insolvency system and the reduction in intervention by the courts in restructuring, by increasing the powers of the insolvency administrator, increasing the duties of company directors and establishing the concept of “cram down” in much of Europe.

The Proposed Directive has, however, received its first criticism from Spain. Specifically, BBVA bank has proposed to the Commission several modifications, some of them in opposition to certain objectives of the Proposed Directive, such as suggesting an increased amount of judicial intervention in restructuring processes. Doubt has also been expressed about the figures of “cram down”, criticizing the apparent lack of clarity and suggesting greater legal control over the classes of creditors who would benefit from others in the payment of their debts.

Other institutions have also criticised the Proposed Directive for the lack of a more determined commitment to extend the effects of “second chance” to the debts of consumers. Existing Spanish regulation of “second chance” has been described as excessively restrictive and it is likely that the existing Spanish regulations will be modified in the light of the Proposed Directive.

© Copyright 2017 Squire Patton Boggs (US) LLP

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About this Author

Fernando González, Madrid, Intellectual Property Attorney, "
Partner

Fernando González leads the dispute resolution and intellectual property (IP) team in Madrid. Fernando has more than 25 years of litigation experience in commercial and IP law. He represents clients around the world in international arbitration proceedings. He also has experience in the areas of fraud and insolvency.

Fernando is listed as the Spanish representative of Fraudnet, a network of lawyers integrated in the International Chamber of Commerce. He is a member of the board of a renowned American university in Spain. He has also served on...

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