Collecting in Spain

• ThepaymentbehaviorofSpanishcompaniesremainspoor,withpaymentsoftenoccurringin70to80daysonaverage.Commercialcredit(latepayment)constitutesanunderlyingfeatureofcommercialexchangesinSpain.

• ThejudicialprocessinSpainisveryslow,soitisusuallypreferabletoconductefficientandorchestrateddebtcollectioneffortspriortoconsideringlegalaction.

• Whenthedebtorhasbecomeinsolvent,collectingdebtbecomesextremelycomplicated,especiallyasfarasunsecuredcreditorsareconcerned.

Collection complexity

Complexity relating to

Notable High VeryHigh Severe

Payments

Court proceedings

Insolvency proceedings

Notable Severe

Euler Hermes

CollectionProfileSpain

ContentsGeneral Information........................................................................................................................................3

Availabilityoffinancialinformation................................................................................................................3Maincorporatestructures...............................................................................................................................3Regulatoryenvironment..................................................................................................................................3

Getting Paid........................................................................................................................................................4

DaysSalesOutstanding(DSO).......................................................................................................................4Latepaymentinterest.......................................................................................................................................4Debtcollectioncosts.........................................................................................................................................4Ownershipprotection......................................................................................................................................4Payments.............................................................................................................................................................4

Collecting Overdues........................................................................................................................................5

Amicableaction................................................................................................................................................. 5Legalaction......................................................................................................................................................... 5Alternativestolegalaction.............................................................................................................................. 7

Handling Insolvent Debtors..........................................................................................................................9

Insolvencyproceedings...................................................................................................................................9

Days Sales Outstanding (DSO): Latepaymentofupto15or20dayscanstilloccur,withpaymentoftenreaching70to80daysonaverage.

General information

Availability of financial informationExceptforstockexchangelistedcompanies,littleinformationondomesticcompaniesispubliclyavailable.Nonetheless,businesseshaveanobligationtopublishtheirfinancialsintheofficialMercantileRegister,andalackofpublicationmaysometimesleadtoclosingthecompany’sinscriptionintheRegister.EulerHermesobtainsfinancialdatafromcompaniesaswellasfromexternalinformationprovidersinordertocross-verifyitsdatabaseofdoubtfuldebtors.EulerHermesthenallocateseachcompanyagradereflectingitsfinancialhealthandhowitconductsbusiness.Gradesrepresentacoreofourknowledgeandanalysis,andhelpclientsidentifyandavoidrisk.Dataiscontinuouslymonitoredtoofferthemostup-to-dateinformationtosupportmanagementdecisions.

Main corporate structuresLiabilityforbusinessdebtsisdeterminedbylegalstructures,whicharedescribedasfollows:• SoleProprietorship(EmpresarioIndividualorAutónomo)is

availableforsmallbusinessesmanagedbyanindividualandforwhichnocommercialstructureisnecessary.Inthiscase,theownerisheldliableforallbusinessdebts.TwoormoreindividualsmayalsodecidetoshareownershipandresponsibilitiesthroughPartnerships(SociedadColectiva),inwhichcasethepartnersmaybejointlyandindividuallyliablefortheactionsoftheotherpartners.LimitedLiabilityPartnerships(SociedadComanditaria)mayalternativelyofferlimitedliabilitytothepartners.

• PrivateLimitedLiabilityCompanies(SociedadesdeResponsabilidadLimitada,SLorSRL)andtheirsimplifiedversionNewEnterpriseLimitedCompanies(SociedadesLimitadasNuevasEmpresas)requireminimalcapitalfunds(EUR3,000)whiletheshareholders’liabilityislimitedtotheircontribution.PublicLimitedLiabilityCompanies(SociedadesAnónimas,SA)areusedforlargerstructureswillingtodividetheircapital(atleastEUR60,000)intotradableshares.Intheseentities,theshareholders’liabilityislimitedtothevalueoftheirshares.Finally,CooperativeCompaniesarecommoninthefarmingsector:theworkersaretheshareholders,andthistypeofcompanyistoberegisteredinaspecialregisterdependingontheRegionalGovernment.

• ForeigncompaniesmayalternativelysettleinSpainthroughBranchOffices,whichprovidenoliabilitylimitationstotheforeignparentcompany.JointVenturesmaytaketheformofanylegalstructurelistedabove,butincorporationisnotnecessary,soacontractdraftedforthispurposewouldsuffice.

Regulatory environmentSpainhasaCivilLawsysteminwhichtherulesareessentiallycodifiedandsupportedbycaselawevolutions.ThejudiciarydividesintovariouscourtlevelsincludingMunicipalCourts(JuzgadosdePaz)dealingwithsmallclaims,DistrictCourts(JuzgadosdePrimeraInstancia),CommercialCourts(JuzgadosdeloMercantil)inthe

maincities,AdministrativeCourts(JuzgadosdeloContencioso-administrativo),AppealCourtsspreadattheprovinciallevel(AudienciasProvinciales)andaSupremeCourt(TribunalesSuperioresdeJusticia)actingasthecourtoffinaljurisdiction.

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Getting Paid

Days Sales Outstanding (DSO)ThepaymentbehaviorofSpanishcompaniesremainspoorandcommercialcreditconstitutesanunderlyingfeatureofcommercialexchangesinSpain.Despiteanimprovementin2014and2015,latepaymentofupto15to20dayscanstilloccurandpaymentoftenreaches70to80daysonaverage.Asageneralrule,thelargerthecompany,thelongertheterms.

Late payment interestSpainhasimplementedtheRecastDirective2011/7/EUwhichstipulatesthatpaymentsintheEUmustbemadewithin60days,throughtheRoyalDecreeLawNo4/2013whichenteredintoforceinFebruary2013.Bylaw,thepartiesmayagreeonpaymenttermsupto60days,butinvoicesbecomepayablewithin30daysifnoagreementhasbeenmadeonthematter.Inaddition,thelawentitlesthecreditortoreceivelatepaymentcompensationasagreedthroughacontractorcalculatedonthebasisoftheEuropeanCentralBank’srefinancingrateincreasedby8percentagepoints.Latepaymentinterestessentiallyisanegotiationtoolintheamicablecollectionphase,thoughitwouldalsobeclaimedduringthelegalphaseeventhoughitwouldrarelyberecovered.

Debt collection costsInaddition,creditorsareentitledtoreceiveaflatEUR40sum(underthejuiciomonitorioprocedureto)tocover‘minimumsupplementarydamages,’whilealsobeingabletoclaimcompensationforallrecoveryexpenses(legalfees,recoveryagencyfees,etc.)imputabletothedebtor.Inpractice,notallcourtswouldacceptthisanditmaydelaytheprocess.

Ownership protectionRetentionofTitle(RoT)agreementsaimingtopreserveownershipovergoodsuntiltherelatedinvoiceispaidinfull(simpleRoT)arenotcommoninSpain,buttheyareadmissible.RoTprovisionsmustalsobesignedbeforeanotaryandberegisteredwiththeRegistrodeBienesMueblesCentral,thereforetheprocessmaybeconstraining, so it is not used often in practice.

PaymentsBanktransfersareamongthemostpopularpaymentmeansforinternationaltransactionsastheyarefast,secured,andsupportedbyanincreasinglydevelopedbankingnetworkinternationallyanddomestically.ExporttransactionsareusuallyguaranteedthroughanExportCreditInsurancepolicy,whichhelpsminimizetheriskofsuddenorunexpectedcustomerinsolvency.EulerHermes’worldwidenetworkofriskofficesmonitorsthefinancialwell-beingofcustomersandgrantsthemaspecificcreditlimituptowhichclientsmaytradeandclaimshouldsomethinggowrong.Alternatively,StandbyLettersofCredit(abankguaranteesthe

debtor’screditqualityandrepaymentabilities)areoftenusedinrelationtoexportshipmenttransactionssincetheyconstitutereliableguaranteeswhichcanbetriggeredasa‘paymentoflastresort’iftheclientfailstofulfilacontractualcommitment.Also,irrevocableandconfirmedDocumentaryLettersofCredit(adebtorguaranteesthatacertainamountofmoneyismadeavailabletoabeneficiarythroughabankoncecertaintermsspecificallyagreedbythepartieshavebeenmet)areincreasinglyreliedupon.Bankguaranteesareincreasinglydifficulttoobtainwhilechecksoffernosecurity.Promissorynotes(pagaré)arerathercommonbecausetheyaredirectlyenforceablebeforetribunalsifleftunpaid,andleadtothedebtor’sregistrationwiththeRegistrodeAceptationesImpagadas(withsignificantimpactoncreditratings).Billsofexchange(recibos)aresimilarlyusedasdebtrecognitiontitleswhenthecommercialpartnerisknownandtrustworthy.Overall,itisadvisabletorequestdownpaymentwheneverpossible.

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Payment terms:Bylaw,thepartiesmayagreeonpaymenttermsupto60days,thoughinvoicesbecomepayablewithin30daysifnoagreementhasbeenmade.

Collecting overdues

Amicable actionNegotiatingThejudicialprocessinSpainisveryslow,soitisusuallypreferabletomakeconcessionsattheamicablestageinordertoavoidlegalactionswhichcanleadtoinsolvencyproceedings.Beforestartinglegalproceedingsagainstadebtor,assessingitsassetsisalsoimportantasitallowsverificationastowhetherthecompanyisstillactiveandwhetherrecoverychancesareatbest.Inaddition,itisessentialtobeawareofthedebtor’ssolvencystatus:ifinsolvencyproceedingshavebeeninitiated,itindeedbecomesimpossibletoenforceadebt.

Legal action

Ordinary proceedingsIfthedebtiscertainandundisputed,fast-trackproceedingsmayhelpsolvetheissuewithlimiteduseofthecourts.The‘Juiciocambiario’procedureaimsatobtainingaPaymentOrderfortherecoveryofdebtsdocumentedbyapromissorynote,checkorbillofexchange.TheprocessisveryshortbySpanishstandards(eightmonthstoayear)andstartswithanattachmentproceedingagainstthedebtor’sgoods.The

‘Juicioverbal’isasimilar(althoughoral)procedurewhichcanbeinitiatedforclaimsbelowEUR6,000.The‘juiciomonitorio’procedure,inaddition,onlyrequirescommoncommercialdocumentation.SinceOctober2015,theclaimforpaymentcanbedonethroughanotary.Ifthebuyerrecognizesthedebt(orfailstoappearwithin20daysfromtheclaimnotification),theprocessbecomesanattachmentproceedingagainstthedebtor’sgoods.Theattachmentproceedingmustalwaysbeexecutedthroughthecourt.Ifthebuyerdoesn’trecognizethedebt,however,theprocessbecomesanordinaryprocess.TheMonitoriowasoriginallycreatedforclaimsuptoEUR250,000butthisthresholdhasnowbeenremoved.Inanycase,theproceduremustbetransformedintoanormallawsuitifthedebtorfailstopayorbringsadefense.WhenthedebtorcompanyhasassetsinotherEUMemberStates,aEuropeanPaymentOrderprocedurefacilitatingtherecoveryofundisputeddebts(underRegulationECNo1896/2006)mayfurthermorebetriggered.Inthiscase,thedemandingpartymayrequestadomesticcourttoissueanOrdertoPaywhichwillthenbeenforceableinallEuropeanUnioncountries(exceptDenmark)withoutexequaturproceedings.Ordinarylegalaction(juicioordinario)wouldusuallycommencewhenamicablecollectionhasfailed.LegaldunningwouldoftenstartwitharegisteredDemandLetterwhichhasnolegalvalueapartfromrecallingthedebtoroftheirobligationtopaytheprincipaltogetherwithlatepaymentinterest(ascontractuallyagreedortakingalegal

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rateasareference)withintendays.Thedebtorcanthenmakeaproposalforapossibleinstalmentagreement.Otherwise,thecreditorwouldfileaclaim(inexcessofEUR6,000)withtheDistrictCourtandservethedebtorwithSummons.Thedebtoristhengiven20daystofileadefense,thepartiesexchangearguments,andapreliminaryhearingisorganizedbythecourtpriortorenderingadecision.Thecourtswouldtypicallyawardremediesasrequiredbythepartiesatthestartoftheproceedings,intheformofcompensatorydamages,injunctions,specificperformance,etc.Punitivedamagesarenotavailable,however.

Necessary documents• Invoices• Checks• Deliverynotes(wheneverthedeliverynoteisnotsignedbythe

debtor,acertificatefromthetransportcompanyisrequired)• Actualizedstatementofaccount• Promissorynotes• Creditnotes• PowerofAttorney(HagueApostille)

Time limitationsCommercialclaims,basedontransactionsthatoccurredbeforeOctober2015,canbebroughttocourtwithin15years.TransactionsafterOctober2015mustbeclaimedwithinfiveyears.Thethreeyearlimitationonunpaidpromissorynotesandchecksstillappliesandthelimitationintransportationdisputesremainsatoneyear.

Provisional measuresInexceptionalcircumstances,provisionalmeasuresmayhelptopreservethecreditor’sinterestspendingafinaldecision.Uponrequest,thecourtsmayorderprovisionalmeasuresaimingatpreservingthestatusquo,atpreservingevidenceoratavoidingirreparabledamage(attachmentofthedebtor’sassets,mandatoryinjunctionstodosomething,prohibitoryinjunctionstopreventfromdoingsomething,protectionofrights,etc.).Itwouldbenecessarytodemonstratethattheclaimhasagoodchancetosucceedandthatdamagesalonewouldnotsufficeintheabsenceofprecautionarymeasures.Inemergencysituations,thecourtmaytakeitsdecisionexparte(i.e.withoutthedebtorbeingpresent)withinonetothreedays,thoughthecourtwouldusuallyrequestthattheclaimantprovidesecurityoncostsinordertoprotecttherespondentfromirresponsibleaction.

Lodging an appealDecisionsrenderedinfirstinstancemay,within20days,bebroughtbeforetheAppealCourts,whichwouldreviewthecasetakingbothissuesoflawandfactintoconsideration.ThedecisionrenderedinsecondinstancemayalsobeappealedagainstbeforetheHighCourt,whichwouldstrictlyfocusonlegalinterpretationmatters.

Enforcing court decisionsAjudgmentisenforceableassoonasitbecomesfinal(i.e.whenall

Collection @ Euler HermesItisalwaysadvisedtoattemptcollectionpriortoanylegalactioninordertomaximizechancesofsuccessfulrecoveryandavoidlegalcostsanddelays.Ourkeyprincipleistocollectincloseproximitytothedebtor,usingaseriesofletters,emailsandphonecallsinthelocaldebtorlanguage.OurWorldCollectionNetworkofEulerHermesofficesandexternalprovidersareexpertsinprofessionaltradedebtcollectionandnegotiation,ensuringpositiveoutcomeswhileretainingimportantclientrelationships.EulerHermescanhandlethecompletecollectionsprocessfromamicable,pre-legalactionthroughtojudgmentandenforcement.

appealvenueshavebeenexhausted).Ifthedebtorfailstosatisfythejudgmentwithin20days,anduponrequest,theCourtClerkshallissueanordertomoveproceedingsforwardandshallcontactthefinancialinstitutions,publicregistriesandanyothercompanyorpersonssothattheyareabletoprovidealistofanyassetsandrightsbelongingtothedebtorwhichtheyknowof.Asaresult,enforcementproceedingswouldalwaysbemorequickandefficientwhenthedebtor’sassetscanbeidentified.Theassetsshallthenbeattachedinthefollowingorder:(i)Cashorcurrentaccountsofanykind;(ii)Creditsandrightsrealizableintheactorintheshortterm,andentitlements,securitiesorotherfinancialinstrumentsadmittedfornegotiationonanofficialsecondarysecuritiesmarket;(iii)Jewelsandworksofart;(iv)Incomeincash,regardlessofitssourceandthereasonforitsaccrual;(v)Interest,incomeandrevenueofanykind;(vi)Moveablepropertyorlivestock,shares,titlesorsecuritiesnotadmittedtoofficiallisting,andcompanyshares;(vii)Realestate;(viii)Wages,salaries,pensionsandincomefromself-employedprofessionalsandcommercialactivity;(ix)Credits,rightsandsecuritiesrealizableinthemediumandlongterm.Thedebtormaynegotiatealternativearrangementsorappealtheenforcementorderwithinfivedaysofdelivery,howevertheappealwouldnotsuspendtheproceedings.

How long could legal action take?Inpractice,the‘juiciomonitorio’procedurewouldoftentakeayearorsodependingoncourttimingandonthedebtor’sreaction.ObtainingacourtdecisionundertheOrdinarioproceedingswouldtake18months,butenforcementcouldatleastdoublethisestimate.Proceedingsinvolvingforeignpartieswouldinpracticebeconsideredbycourtsequallyasproceedingsinvolvingdomesticpartiesonly.Therefore,noparticulardelaysoughttobeexpected.

How much could this cost?Courtfees(Tasajudicial)dependonthetypeofprocedure,rangingfromEUR100forEuropeanOrderforPaymentandincidentalbankruptcyprocesses,toEUR1,200forcassationandextraordinaryinfringementslaw.

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Alternatives to legal action

Alternative Dispute Resolution methods (ADR)Giventhedifficultyobtainingtimelydecisionsfromcourts,AlternativeDisputeResolutionmethodssuchasmediation,assistednegotiationandarbitrationconstituteanincreasinglycommonwaytosettledomesticandinternationalbusinessdisputesinSpain.Mediationinvolvesthenominationofamediatorwhoisgiventheresponsibilitytohelpthepartiesreachacompromise.Inotherwords,themediatorhasnoauthoritytodecideonthebehalfofthepartiesandtheycannotbindthepartieswithadecision.Anagreementisonlybindingifasettlementagreementisenteredintobetweenthepartiesattheendofmediation.Themediatorreallyactsasafacilitatortosettlement.Arbitration,rather,involvesthepartiesagreeingtorelyonanindependentandimpartialthird-partyarbitrator,whoisgivenauthoritytosettlethedisputeontheirbehalf.Thearbitrator’sdecisionisbindingontheparties.Asanout-of-courtsettlementmethod,ADRcanbecost-effective,generallyreducesdelays,allowspreservationofconfidentialityandoffersabindingdecisionwhichmaythenbeenforcedbeforethecourtsifnecessary.Wheninternationaltransactionsareinvolved,internationalarbitrationmayalsobeconsidered.MediationhasbeengraduallypromotedsincetheMediationActof2012whilearbitrationiscommonlyrelieduponsincetheArbitrationActof2003(asamendedin2011),butthetrendessentiallycoincideswiththefactthatbusinessdisputesencompassasignificantamountoftechnicaldetailswhichareoftenbestsettledthroughexpertandconfidentialnegotiations.

Foreign forumsSpainisasignatorytotheRomeIRegulationonthelawapplicabletocontractualobligations,whichstipulatesthatthepartiesofacontractmay,bymutualagreement,choosethelawapplicabletotheircontract,andselectthecourtthatwillhavejurisdictionoverdisputes.SpainisalsoasignatorytotheHagueConventionof15June1955,onthelawapplicabletointernationalsaleofgoods,whichstipulatesthatcontractsshallbegovernedbythelawchosenbytheparties,thegeneralspiritoftheagreementandthecircumstancesofthecase.Therefore,businesspartnersmayalternativelyagreetosolvetheirbusinessdisputesinaforeignforum(i.e.underaforeignlaworbeforeaforeigncourt),althoughdomesticcourtswouldtypicallyretainexclusivejurisdictionoverspecificareasoflaw(i.e.insurancelaw,consumerlaw,employmentlaw,immovablepropertylaw,insolvency/companylaw,etc.).Inaddition,domesticcourtsarelikelytodenyapplyingtheforeignjurisdictionclauseifthechosenforeignlawhasnorelationshipwiththecontract,orifthechosenforeignlawismanifestlyincompatiblewithSpanishpublicpolicy.Overall,usingaforeigncourtwouldmakesenseiftheinternationaldimensionofthetransactionrequiresit(andthecontractallowsit),butrelyingonforeigncourtstoescapelengthyproceedingsinSpainhasnoparticularinterestasproceduralcostswouldbedisproportionate.

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Litigation @ Euler HermesShouldlegalactionbenecessaryEulerHermescanprovidesupportthroughoutthelegalprocessfromjudgmenttoenforcementviaourWorldCollectionNetworkofEulerHermesofficesandexternalproviders.Legalactioncanoftenbecomplicatedandexpensive,soyouwillbeinformedofallcostspriortoanyactionandadvisedonwhichrouteisbesttotake.

Enforcing foreign awardsForeignjudgmentsagainstdebtorsowningassetsinSpainaregenerallyenforceablebutvariouscircumstancesmayapply.Ononehand,decisionsrenderedinanEUcountrywouldbenefitfromparticularlyadvantageousenforcementconditions.ApartfromEUPaymentOrders,whicharenormallyenforceabledirectlyindomesticcourts,thetwomainmethodsofenforcinganEUjudgmentinSpainarebytheuseofanEuropeanEnforcementOrder(EEO,asprovidedunderRegulationECNo.805/2004)whentheclaimisundisputed,orbyregisteringthejudgmentundertheprovisionsoftheBrusselsIRegulation(44/2001).Ifthejudgmentqualifiesasanuncontestedclaim,itcanbeenforceddirectly(i.e.withoutregistration)byuseofanEEO,providedthatthedebtorhasidentifiedassetsinthecountry.AEuropeanSmallClaimsProcedure(asprovidedbyRegulationEC861/2007)aimingateliminatingintermediatestepsmaysimilarlyberelieduponwhileenforcingdecisionsuptoEUR2,000.Iftheclaimisdisputed,theprocedureforregisteringanEUjudgmentwithdomesticcourtsisrelativelysimple.Thejudgmentholdermustapplytotherelevantcourtforthejudgmenttoberegisteredandprovidethecourtwith,amongotherdocuments,anauthenticatedcopyofthejudgment,acertifiedtranslationand,ifinterestisclaimed,astatementconfirmingtheamountandrateofinterestatthedateoftheapplicationandgoingforward.Oncethejudgmenthasbeenregistered,itcanbeenforcedasifitwereissuedbydomesticcourts(accordingtotheRecastRegulationEC1215/2012,suchanexequaturprocedureisnolongerrequiredfromJanuary2015).Ontheotherhand,judgmentsrenderedinforeigncountriesoutsideof

theEUwouldnormallyberecognizedandenforcedprovidedthattheissuingcountryispartytoabilateralormultilateralagreementwithSpain(suchtreatieshavebeensignedwithBrazil,Bulgaria,China,Colombia,ElSalvador,Israel,Mexico,Morocco,Romania,Russia,Thailand,TunisiaandUruguay).Intheabsenceofreciprocalarrangements,exequaturproceedingswouldtakeplacebeforedomesticcourts.Asageneralrule,foreignjudgmentscannotbereviewedonthemeritsofthecase,butthecourtswouldgenerallydenyadmissibilitywheretheforeigndecisionisneitherfinalnorenforceableintheissuingcountry,deemedincompatiblewithdomesticpublicpolicyorwithdecisionsrenderedbydomesticcourts,ifthedefendanthasnotbenefitedfromadueprocessoflaw,etc.Itshouldbeemphasizedthat,althoughSpanishcourtsdonotawardpunitivedamages,theyhaveincertaincircumstancesagreedtoauthorizeenforcementofpunitivedamagesordersbyaU.S.tribunal.SpainisasignatorytotheNewYorkConventionontheRecognitionandEnforcementofForeignArbitralAwardsof1958,thereforeitsdomesticcourtsoughttorecognizeandenforceawardsrenderedthroughinternationalarbitrationproceedings.

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Handling insolvent debtors

Theinsolvencyprocedureissubjecttoaliquiditytest(insolvenciaactual)aimingatestablishingwhetherthedebtorispermanentlyunabletosettleitsduedebts.TheSpanishInsolvencyAct(asamendedbyLaw38/2011ofOctober2011)providesforinsolvencyproceedings(concurso)inspiredbyU.S.Chapter11andencouragespre-insolvencydebtrestructuringalternativestoliquidation.Insolvencyproceedingsnormallycommenceuponnotificationoffinancialdifficultiestothecourtbyeitherthedebtorortheircreditors,andincludeacommonphaseinwhichthejudgewillappoint,asageneralrule,oneormorereceivers(dependingonthefirm’sturnover)inchargeofmanagingthebusinessandofdeterminingthedebtor’sestate/outstandingdebts.

Insolvency proceedingsOut-of-Court proceedingsThelawprovidesdebtorswithanopportunitytoseekanout-of-courtFormalRefinancingAgreement(acuerdoderefinanciaciónformal).Whenout-of-courtagreementsareconcluded,itshouldbenotedthatthepartiesarefreetowriteoffasmuchofthedebtastheydeemnecessary.

Restructuring the debtThereceivers’opinionsastotheviabilityofthedebtorcompanymayleadtotheopeningofacompositionagreementphase(propuestaanticipadadeconvenio)designedtoencouragethedebtorandcreditorstopermittherestructuringandsurvivalofthebusiness.Bycontrastwithmostcountries,however,theSpanishinsolvencyframeworkdoesnotprovideanymoratoriumonparallelenforcementproceedingsduringthedebt-restructuringphase.Insolvencyproceedingsmaybeopenedifthedebtorhaslessthan50creditors,ifitsestimatedliabilitiesdonotexceedEUR5millionorifthedebtorhasfiledanearlycompositionagreementproposal.Interestingly,thedebtorneedsthecourt’sauthorizationtowriteoffmorethan50%ofthedebtandtoagreetoaperiodofpaymentlongerthanfiveyears.

Winding up proceedingsThecommonphase(aswellasthefailureoftherestructurationphase)mayalternativelyleadtotheopeningofaliquidationphase,thepurposeofwhichistowind-upthedebtor’sassetsandsatisfyitsdebts.ThecreditorsmustthenfiletheirclaimswiththecourtwithinonemonthfollowingthepublicationoftheinsolvencydeclarationintheOfficialGazette.

Priority RulesAllcreditorswouldbeentitledtoreceiveasimilarpercentageoftheoveralldebtvalue,butcomplexpriorityrulesnormallyapplywhiledistributingtheproceedstothecreditors.Debtsincurredasaresultoftheinsolvencysituationwouldberepaidfirstandinfull.Section84.2.11oftheActwouldthenallowconsidering50%of‘freshmoney’

loansobtainedduringthedebt-restructurationphaseaspriorityclaims.Privilegeddebts(debtssecuredwithmortgageorpledges,salaries,taxes,etc.)wouldfinallybegivenpreferenceovernormal(subordinatedandunsecured)debtswhichwould,inpractice,havelittlechancetoberepaid.

Cancellation of suspect transactions (clawback)Receiversarenormallyentitledtorequestthecourttocancelcertaintransactionsconcludedpriortotheinsolvencyproceedings.Inparticular,anymeasuretakenbythedebtordeemedfraudulentordetrimentaltothecreditors(prematurepayments,gifts,irrationalcontracts,undervaluedtransactions,etc.)wouldtypicallybevoidandconvertedintoeitherpriorityclaimsornormalunsecureddebtsdependingontheactatstake.Asuspectperiodofuptotwoyearsmayapply.

How long could insolvency proceedings take?InsolvencyproceedingsinSpainlastfortwotothreeyearsonaverage,butcanlastforuptotenyearsinthemostcomplexcases.

Necessary documents• Invoices• Checks• Deliverynotes• Actualizedstatementofaccount• Promissorynotes• Creditnotes(ifany)

Insolvency @ Euler HermesEulerHermesworkscloselywithdebtors,creditorsandlawyerstoprovidesupportduringinsolvencyandrestructuringprocesses.Withmanyoptionsavailablewhenitcomestoinsolvencyaction,wecanofferadviceonwhichoptionismostsuitable.

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ThisCollectionProfileispublishedbyEulerHermes,acompanyofAllianz,forinformationpurposesonly.Theinformationprovidedthereinshallnotberegardedasprovidinganylegaladviceoradviceofanykind.Readersshouldmaketheirownindependentevaluationofthisinformationandundernocircumstancesshallanyactionbeundertakensolelyrelyingonit,whilelegaladviceshouldbesoughtwithlegalpractitionersatalltimes.Whilethisinformationhasbeencollectedanddraftedbyrecognizedexpertsintheirfieldanditisbelievedtobecorrectandreliable,EulerHermesmakesnowarranty(expressofimplied)ofanykind,inregardstotheaccuracyorcompletenessofthisinformation,nordoesitacceptanyresponsibility or liability for any loss or damage arising in any way from any use made of, or reliance placed on, thisinformation.Thismaterialshouldnotbereproducedordisclosedwithoutourconsent.ItisnotintendedfordistributioninanyjurisdictioninwhichthiswouldbeprohibitedandCollectionProfilesaresubjecttochangewithoutnotice.

©Copyright2017EulerHermes.Allrightsreserved.

EulerHermes,acompanyofAllianz,leaderincreditinsurancesolutionshelpingcompaniesgrowtheirbusinesssafelyathomeandabroad,providesglobalcommercialdebtcollectionserviceswith trueend-to-endcapability.EulerHermesoffers both domestic and international trade debt collection services worldwide. Through our network, we use ourexperienceandknowledgeoflocalmarketstoensureaprofessionalserviceforourclientsfrompre-legalactionthroughtolegalproceedings.

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