SPAIN Law and Practice Contributed by: Alfonso López-Ibor and Olivia López-Ibor, Lopez-Ibor Abogados
(c) No application filed by a creditor ( concurso necesario ) for insolvency proceedings will be processed. If, after the protection period has elapsed, the insol - vent company has not been able to approve a restruc - turing plan, it will be obliged to file for insolvency pro - ceedings within the following month. • Protection During the Insolvency Proceedings: When a company is facing actual or imminent insolvency, it may file for insolvency proceedings, which may or may not be preceded by pre-insol - vency proceedings. From the moment the court issues the order declaring the insolvency proceed - ings, the insolvent company will be protected against its creditors as follows: (a) Foreclosures may not be initiated against the assets and rights of the insolvent company, and those already initiated will be suspended, with the following two exceptions: (i) liens for labour-related claims or public claims made prior to the insolvency proceedings on assets not necessary for the continuity of the activ - ity of the insolvent company (“non-necessary assets”); and (ii) the enforcement of security interests on non-necessary assets prior to obtaining the declaration of the court on such nature or on any assets, necessary or not nec - essary, if an agreement proposal that does not affect such foreclosure is approved. (b) The limitation set forth in the preceding para - graph shall also apply to (i) actions for rescis - sion of the sale and purchase of real estate properties for failure to pay the deferred price; (ii) actions to recover property sold in instal - ments or financed with reservation of title by means of contracts recorded in the Registry of Goods and Chattels ( Registro de Bienes Muebles ); and (iii) actions to recover property leased by means of contracts recorded in the Property or Registry of Goods and Chattels or formalised in a document that entails execu - tion. (c) The accrual of legal or contractual interest is suspended. (d) The offsetting of claims is prohibited except for those that existed prior to the insolvency
proceedings and those derived from the same legal relationship. This could lead to the insol - vency administrator requesting the return of security deposits in the hands of the lessor, as under Spanish law the title to deposits remains with the lessee. (e) The right of claim to withhold the assets and rights of the insolvent company are suspended. (f) Clauses that establish the counterparty’s right to suspend, modify, terminate or extinguish a contract due to the declaration of insolvency proceedings or the opening of the liquida - tion phase shall be deemed not to have been included. (g) The declaration of insolvency, by itself, will not affect the validity of the contracts with recip - rocal obligations pending fulfilment by both the insolvent company and the other party. Both parties will have to fulfil the agreed-upon services, with obligations incumbent on the insolvent company classified as claims against the estate. However, these contracts may be terminated if there’s a breach of contract fol - lowing the declaration of insolvency. (h) Only successive contracts may be terminated for non-compliance prior to the declaration of insolvency proceedings. (i) If the right to terminate the contract for breach has been exercised, the court may order the contract to be upheld in the interest of the insolvency proceedings, including the payment of the amounts due. Likewise, even if there is no cause for termination, the termination of the contract may be agreed in the interest of the insolvency proceedings. (j) Likewise, in the interest of the insolvency pro - ceedings, the court may agree to the rehabilita - tion of financing contracts, contracts for the acquisition of movable or real estate property with deferred consideration or price and urban leasing contracts. 2.9.8 Liquidation of Domestic Lessees The judge will always appoint an insolvency admin - istrator (receiver) for the resolution of the insolven - cy proceedings. This insolvency administrator will supervise all the actions of the corporate directors (intervention of powers), or will directly replace those
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