Manuel Follía María Lérida Due to the loan portfolios that financial entities have accumulated over the past boom years, a large number of Spanish companies are struggling with payment defaults and consequently facing debt workouts. Certain debt restructurings include so-called pre-insolvency arrangements (pre-concurso), a preliminary stage ahead of any potential formal insolvency process. According to section 5bis of the Spanish Insolvency Act, this stage allows debtors to temporarily avoid filing for insolvency if they notify the relevant court (within a two-month period as of being in a state of actual or imminent insolvency) that they have commenced negotiations with creditors in order to reach either: (i) an out-of-court refinancing agreement (acuerdo de refinanciación); (ii) an early composition agreement (propuesta anticipada de convenio); or (iii) an out-of-court payment agreement (acuerdo extrajudicial de pago). This notification will provide debtors with an additional period of three months to reach an agreement, plus one additional month to file for insolvency if no agreement has been reached.
February 24 2014
