Coronavirus - Government measures in key jurisdictions - Flipbook - Page 74
Spain
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Insolvency
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Suspension of all procedural terms and authorised judicial proceedings:
– All procedural terms for all kinds of courts have been suspended, which includes
terms before commercial courts, which are the courts that specialise, among others,
in insolvency matters and form part of the civil jurisdiction. These terms will resume
when the state of emergency ends. However, this suspension does not prevent the
courts from ordering the performance of any judicial steps that are necessary to
prevent irreparable damage to the legitimate rights and interests of the parties to the
proceeding.
Has the
government
made any
changes to
insolvency
legislation?
– New insolvency proceedings are also subject to the restriction of new submissions
indicated above.
•
Suspension of some material terms or partial moratorium: A moratorium has been
established on the duty to file a petition for the opening of insolvency proceedings
while the state of emergency is in effect. During the moratorium, the debtor will also
be protected from any petitions for the opening of mandatory insolvency proceedings
filed by its creditors.
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For more information please visit: Companies facing the COVID-19 crisis, and
COVID-19: Key new legislation introduced in Royal Decree-Law 11/2020
Contractual
Issues
•
There has not been any outstanding measure taken by the Spanish Government
regarding the specific reinforcement of contracts, therefore, normal rules would
apply.
What measures
have been taken
to reinforce
contracts?
•
When it comes to contract suspensions and reductions in working hours that are
directly caused by losses in activity as a result of COVID-19, a legal provision has been
included in Royal Decree-law 8/2020, of March 17 (RDL 8/2020) stating that those
specific cases shall be considered as force majeure, when duly verified.
•
It should be taken into account that the force majeure term relates with the
impossibility of the parties to perform their respective obligations due to the
existence of an event that could not have been foreseen or that, if foreseen, were
inevitable. In this respect, the scope and applicability of the force majeure would be
subject to the specifics of each case, which shall be, in last instance, examined and
determined one by one by the judicial courts.
•
Likewise, if the performance of a contract is significantly affected due to unforeseen
circumstances, it should be considered that there is a legal doctrine on hardship
created by case law, that allows obligations and contracts to be reviewed when the
economic balance of the contract has been upset and the contract has become
impossible or very difficult to perform for one of the parties due to those unforeseen
circumstances. However, it should be noted that the Spanish courts have hitherto
applied hardship principles very cautiously and the specific characteristics of each
case must be thoroughly looked at to determine whether it is applicable.
•
For more information please visit: Companies facing the COVID-19 crisis, and Force
majeure and the grounds for suspension of contracts due to COVID-19 cannot be
regarded as justifying dismissal
Government measures in key jurisdictions
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