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.