Urgent measures to support business solvency by Covid

Royal Decree 34/2020 of 18 November has established certain measures to promote business solvency, establishing certain measures to stimulate the economy and help companies to overcome the serious crisis that we have been suffering to date. These measures include the following: 

1.Extension of the maturity and grace periods for financing operations for the self-employed and companies that have received public guarantees channelled through the Official Credit Institute (RDL 34/2020 art.1).

Notary and registry fees derived from the formalisation and registration, where applicable when there is a mortgage guarantee, of the extension of maturity and grace periods will be subsidised (RDL 34/2020 art.2).

Extraordinary measures applicable during the year 2021, to legal entities under private law (RDL 34/2020 art.3).

a. Public limited companies: although not provided for in the articles of association, the notice of the general meeting may provide for attendance by telematic means and remote voting, as well as the holding of the meeting anywhere in Spain.

b. Limited liability companies and limited partnerships by shares: although not provided for in the articles of association, the general meeting may be held by videoconference or multiple telephone conference, provided that these conditions are met:

- all persons entitled to attend or those representing them have the necessary means at their disposal,

- their identity is recognised by the secretary of the body, and

- so stated in the minutes, which shall be sent immediately to the e-mail addresses.

c. Other legal persons governed by private law (associations, civil societies and cooperative societies) may hold their meetings or assemblies of members or partners under the same conditions. This system also applies to meetings of the boards of trustees of foundations.

3. Measures in insolvency matters (RDL 34/2020, final provision 10).

a. The moratorium is extended until 14 March 2021, inclusive, on the obligation to apply for the declaration of bankruptcy:

- of the duty to request the declaration of insolvency, of the debtor who is in a state of insolvency, and

- the non-admission of applications for voluntary insolvency proceedings that have been lodged since 14 March 2020.

The application for voluntary insolvency proceedings filed by the debtor up to and including 14 March 2021 shall be admitted for processing in preference, even if it is filed after the date of the application for insolvency proceedings.

b. Applications for a declaration of non-compliance with the arrangement. The judge will transfer the application to the insolvent party, with the following effects:

- those filed up to 31 October 2020 will not be admitted for processing until 3 months have elapsed from that date.

- those lodged between 31 October 2020 and 31 January 2021 will not be admitted for processing until 3 months have elapsed since the latter date.

For those submitted and admitted for processing between 31 October 2020 and 18 November 2020, the procedure will be suspended for a period of 3 months from the date of suspension.

In all cases, during these 3 months, the insolvent party may submit a proposal to amend the arrangement, which will be processed in priority to the application for a declaration of default.

c. Applications for a declaration of non-compliance with the refinancing agreement. The judge will transfer the application to the debtor, with the following effects:

- those filed up to 31 October 2020 will not be admitted for processing until one month after that date.

- those lodged between 31 October 2020 and 31 January 2021 shall not be admissible until one month has elapsed since the latter date.

In both cases, during that month the debtor may inform the court with jurisdiction for the declaration of insolvency proceedings that he has begun or intends to begin negotiations with creditors to modify the approved agreement in force or to reach a new one, even if one year has not elapsed since the previous application for approval. If the debtor does not reach a modification agreement or a new agreement within 3 months of notifying the court, the judge will admit the applications for a declaration of default filed by the creditors.

Consult with our Lawyers in any of the Law Firms in Madrid.