1. Three New Procedures

Old concurso = one size fits all. New TRLC has 3 tracks:

A. Planes de Reestructuración - Arts 614-694 TRLC - Pre-insolvency
For viable companies in likelihood of insolvency (probabilidad de insolvencia) or imminent insolvency. No judge needed to start, no public stigma. Goal: avoid concurso.

B. Concurso de Acreedores - Arts 1-400 TRLC - Classic insolvency
For current insolvency. Now faster, with early sale of productive units.

C. Procedimiento Especial para Microempresas - Arts 685-720 TRLC - New
For <10 employees and <€2M turnover or liabilities <€2M. 70% of Spanish companies. Fully digital via platform. No need for lawyers/insolvency administrators in many cases.

Plus Second Chance - BEPI - Arts 486-502 TRLC

2. Planes de Reestructuración - The Star Reform

Who can use: Any debtor (individual entrepreneur, company) in probabilidad de insolvencia (in next 2 years foreseeable cannot meet obligations) or insolvencia inminente (3 months).

No need to be insolvent. This is early warning tool.

How it starts: Communication to court - Comunicación de apertura de negociaciones - Art 585 TRLC. Automatic stay (moratoria) 3 months + 3 months extension. Stops executions, including necessary assets, stops obligation to file concurso.

Expert in reestructuración: Court can appoint if requested by debtor or 40% creditors. Replaces old mediator.

Classes: Debtor must form classes of creditors affected. Minimum separation:

• Secured vs unsecured
• Workers, public creditors (AEAT, TGSS now can be affected - major novelty)
• SMEs vs financial

Voting: 2/3 of liabilities in each class (3/4 if secured) must approve. No need for unanimity.

Cross-class cram-down (arrastre de clases disidentes) - Art 639:
Revolutionary in Spain. Even if one class votes NO, judge can homologate plan if:

1. At least one class of creditors who would be affected and have community of interest approves
2. Plan respects absolute priority? No, Spain adopted relative priority - Art 639(2): dissenting class must be treated at least as favorably as any junior class, and more favorably than junior class that keeps something. More flexible than US absolute priority.
3. No creditor worse than liquidation - Best interest test - Art 639(3) - must receive at least what would in liquidation (liquidation value test by expert).
4. Feasibility - not leading to insolvency

This allows cramming down public creditors - previously impossible.

Public Creditors (Hacienda y TGSS):
Before 2022, AEAT/TGSS could not be haircut. Art 616 bis and 638: Now can be affected with limits:

• Cannot be crammed down without their consent unless debtor proves it has tried to pay and only limited haircut
• Limits: Quita max 50% (can be higher if very exceptional), espera max 5 years (can be 10)
• But now possible - this unblocks 80% of Spanish restructurings

Homologation: Judge confirms if formalities + best interest + feasibility. Once homologated, plan binding on all affected creditors, including dissenting and non-voting.

3. Second Chance - BEPI - Arts 486-502 TRLC - Biggest Social Reform

For natural persons (consumers and autónomos).

Old system: Required to pay threshold + try extrajudicial agreement + good faith very strict. Only ∼3,000 cases/year.

New system - Transposition Art 20 Directive:

Two modalities:

A. With liquidation and discharge:
Debtor liquidates non-exempt assets, then gets immediate exoneration of remaining unsatisfied debt (including public debt partially). No payment plan needed.

B. Without liquidation - with payment plan 3 or 5 years:
Debtor keeps assets (including habitual residence if needed) and proposes payment plan based on disposable income (income - essential expenses - IPREM). After 3 years (if keeps home) or 5 years, remaining debt exonerated.

What debt can be exonerated?

• All private debt - banks, suppliers
• Public debt: AEAT and TGSS up to €10K each in first exoneration, €5K each in subsequent? Actually final law: Up to €10K per creditor (AEAT, TGSS) exonerable automatically, excess subject to payment plan but can also be exonerated if judge sees disproportionate. For second exoneration, limits lower.
• This is novelty - previously public debt NOT exonerable.

Good faith - Art 487:
Debtor is in good faith unless:

• Convicted for economic crimes in last 10 years
• Sanctioned for serious tax, labour, social security infraction
• Concurso declared culpable
• Provided false info

Previous requirement of not having rejected suitable job etc. removed.

No need for prior attempt to reach agreement. Direct access.

4. Microenterprise Procedure - Arts 685-720

For companies <10 workers and <€2M.

Two modules:

A. Continuation procedure: Debtor proposes continuation plan (similar to restructuring plan but simplified, via online form). Creditors vote online. If approved, binding.

B. Liquidation procedure: Fully digital, debtor files liquidation plan, no insolvency administrator needed unless creditors request.

Goal: 3 months max.

5. Sale of Productive Units - Pre-pack (Art 224 bis)

Spanish pre-pack now allowed: Debtor can seek binding offers for productive unit before concurso, with expert, and court authorizes sale at start of concurso, without full auction, if better value. Protects jobs.

6. Directors Liability

Art 5 bis TRLC duty to file concurso within 2 months of insolvencia actual. If in negociaciones with restructuring plan communication, suspension of duty.

If directors cause delay, concurso culpable.

7. Key Case Law Post-Reform

Restructuring Plans:

1. Auto Juzgado Mercantil Madrid 14/11/2022 - Celsa Group - First big homologation:
First major plan under new law - €2.8B steel group. Court homologated plan cramming down dissenting creditors including hedge funds. Established best interest test requires independent expert valuation (Duff & Phelps). Confirmed relative priority allowed.

2. Auto JM Barcelona 2023 - Single Productive Unit Sale (pre-pack) - Textil:
Court approved pre-pack sale without auction because expert proved offer 30% above liquidation value. Validated Art 224 bis.

3. Auto JM 2 Madrid 2023 - Dragados / Public Creditors:
First case where AEAT crammed down with 40% quita and 5-year espera. Court held Art 616 bis allows affecting public credit if debtor proves viability and that public creditor gets at least as much as liquidation.

4. Auto JM Valencia 2023 - Classes Formation:
Court rejected plan where bank separated its own credits into many classes to manipulate voting. Must have community of interest, not artificial.

Second Chance:

5. Auto JM Barcelona 3/10/2022 - First BEPI without liquidation:
Debtor, autónomo with €180K debt, kept house, 3-year payment plan of €300/month. Court granted exoneration of €150K including €15K AEAT/TGSS. Established 3-year plan if habitual residence preserved.

6. STS 12/01/2023 (Supreme Court) - Good Faith Interpretation:
Even before reform, SC held second chance must be interpreted pro-debtor. Post-reform, lower courts cite this to grant exoneration even with prior negligence, unless fraud.

7. Auto JM Alicante 2023 - Public Debt Exoneration Limit:
Debtor had €50K AEAT debt. Court exonerated €10K immediately, rest included in 5-year plan, after plan remainder exonerated because payment of all would make plan unviable - uses proportionality test in Art 489(1)(v).

8. CJEU C-158/20 - Finanzamt v - EU Directive Interpretation:
CJEU held public creditors can be included in restructuring if national law allows and does not discriminate. Used by Spanish courts to justify AEAT cram-down.

9. SAP Barcelona 2023 - Microenterprise Continuation:
First microenterprise continuation plan approved online in 2 months. Debtor 3 employees, €400K debt, plan 50% quita, approved by 70% creditors. Demonstrated new procedure works.

10. STS 20/02/2023 - Concurso Culpable and BEPI:
If concurso declared culpable due to delay in filing, debtor loses good faith and BEPI denied.

8. Practical Checklist

For Company in Distress - Probabilidad de Insolvencia:

1. File Comunicación Art 585 immediately - gets 3-month shield
2. Appoint restructuring expert if complex
3. Prepare viability plan + liquidation value report by independent expert (mandatory for homologation)
4. Form classes correctly - do not gerrymander
5. Negotiate with AEAT/TGSS early - offer at least 20-30% payment
6. Seek homologation with cram-down if needed

For Individual / Autónomo - Second Chance:

1. No need to try extrajudicial agreement now
2. Choose: with liquidation (fast) or without (keep house)
3. Calculate disposable income per Art 493 - income minus essential expenses (IPREM x factor)
4. List all debts, including public - request exoneration up to €10K per public creditor + payment plan for rest
5. Good faith declaration

Timeline: Restructuring plan 3-6 months vs old homologación 12-18 months. Second chance 3-5 years vs old 5-10.

Result: Spain now has US Chapter 11-style restructuring + UK scheme + German StaRUG in one.