SPAIN Law and Practice Contributed by: Ángel Pérez López, Luis Jiménez and Rodrigo del Saz, Uría Menéndez
case of fraud, civil rescission may be exercised and the look-back period is increased to four years). Law 16/2022 introduces, upon the occurrence of certain circumstances, the same rescission grounds to actions and agreements entered into by the borrower within two years preceding the filing of a pre-insolvency proceeding. Although the Spanish Insolvency Law does not define the term “detrimental” , according to case law, if the actions are justified (ie, the transaction was the most feasible alternative to preventing further deterioration to the insolvency estate), the transaction should not be considered detri- mental to the insolvency estate and should not be subject to rescission. Likewise, actions and transactions that adverse- ly affect the par conditio creditorum may be con- sidered detrimental (ie, actions, agreements or transactions that, while benefiting some credi- tors, reduce the likelihood of others being paid) even if the debtor’s assets are not reduced as a consequence of those actions. In any case, whether an action, agreement or transaction is detrimental to the insolvency estate requires a case-by-case analysis. The Spanish Insolvency Law provides some examples of detrimental actions, when it: • (i) is made for no consideration; • (ii) is a disposal for valuable consideration to “specially related” party to the debtor; • (iii) includes the creation of new security inter- ests to guarantee existing debt or new debt that substitutes any existing debt; or
• (iv) constitutes a prepayment or any similar act of extinction of secured obligations before maturity. The presumption under (i) cannot be rebut- ted and actions or transactions carried out for no consideration will be rescinded, except for business donations without consideration ( liber- alidades de uso ) and payments or other acts of extinction of future obligations, unless secured by an in rem security, in which case the general presumption rule set out in (iv) above applies. The remaining presumptions are rebuttable. Actions taken in the ordinary course of busi- ness under normal circumstances may not be rescinded; Spanish courts nevertheless con- strue this exception restrictively. The granting of downstream, upstream and cross-stream security interests or personal guarantees could be subject to claw-back if the guarantor becomes insolvent within the two years following the delivery of the guarantee and the guarantee is considered “detrimental” to the guarantor. While downstream guarantees are likely to entail a benefit for the parent providing the guarantee (such as the expectation of divi- dend flows or increase in the value of the sub- sidiary), the position related to cross-stream and upstream guarantees is not as straightforward. Nevertheless, some recent court rulings, due to the existence of a group interest and on the basis of the effective consideration theory described above, have not deemed this type of guaran- tee a donation or action for no consideration, as consideration must be taken into account in the context of the group as a whole rather than as each of the companies of the group individually. While this line of reasoning is not undisputed and risk-free, it is an improvement and has paved the
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