June 26, 2022

Volume XII, Number 177

Advertisement
Advertisement

June 24, 2022

Subscribe to Latest Legal News and Analysis

June 23, 2022

Subscribe to Latest Legal News and Analysis

Spain Introduces New Scheme To Give Bankrupt Individuals A Second Chance

The Royal Decree-Law 1/2015 dated February 27, 2015 (the “RDL”) seeks to implement urgent measures to, among other things, reduce individual debtors’ financial burden.

The RDL was designed to give a second chance to an individual debtor and introduced a mechanism according to which such debtor may have his debts discharged if (i) he acts in good faith and (ii) he has previously liquidated all his assets in favour of his creditors (or his bankruptcy proceeding concluded due to insufficient assets).   In addition, the RDL proposes flexible out-of-court payment arrangements for the individual debtor to repay his creditors.

Once the above mentioned criteria are met, the individual debtor may automatically have his outstanding debts discharged provided that he has paid (i) his secured creditors 90% of the fair value of the security, (ii) the debts of the insolvency estate (“créditos contra la masa”) in full, and (iii) at least 25% of the ordinary credits.  Alternatively, provided that the debtor accepts a payment schedule over a 5-year period for certain debts, the debtor may remain provisionally exonerated from all of his debts.  In order to obtain a full discharge, the debtor must pay his non-dischargeable debts during the 5-year period or make a “substantial effort in this regard”, which means that the debtor must devote at least half of the income he receives during this period to pay certain of his creditors.

Creditors of the individual debtor have not been left unprotected, however, as they may request a bankruptcy judge to revoke the benefit of the discharge in certain circumstances, such as when the debtor’s financial situation has improved or when the debtor fails to meet his payment obligations in accordance with the agreed-upon payment schedule.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume V, Number 92
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Fernando González Intellectual Property Attorney Squire Patton Boggs Madrid, Spain
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 IBA and INTA committees.

He is...

34 91-426-4843
Ramón Castilla Corporate & Real Estate Attorney Squire Patton Boggs Madrid, Spain
Partner

Ramón Castilla has more than 15 years of experience as a corporate M&A and real estate lawyer.

Ramóns' main expertise is advising on corporate and real estate operations such as: 

  • Purchase and sale of the companies operating in the real estate sector; 
  • Purchase and lease back of all types of real estate assets (department stores, office buildings, industrial premises, hotels); 
  • Sale & Lease Back operations of real estate assets; 
  • Financing and corporate restructuring of real estate groups;
  • Lease agreements...
34 91-426-4848
Advertisement
Advertisement
Advertisement