Spain: Extension of the Moratorium on the Duty to Request Insolvency until 31 December 2021

15 March 2021 - José María Rocalba Méndez

In September 2020, various regulations were approved in procedural and insolvency matters. Their principal aim was to establish a series of protective measures for companies intended to avoid declarations of insolvency and subsequent liquidation for companies that could be economically viable under normal market conditions.

Royal Decree-Law 34/2020, of 17 November, on urgent support measures for corporate solvency and the energy sector, broadened some of these measures and specifically extended the moratorium on insolvency until 14 March 2021. This implied extending until 14 March 2021 the suspension of the duty to request the declaration of insolvency and also extended until the same date the judge’s obligation to admit an insolvency for processing if so requested by the creditors.

The Spanish Government, on 12 March, extended this moratorium until 31 December 2021.  It is worth analysing what other assistance for companies will materialise, as the moratorium, which initially may have been necessary, if extended too much over time, could de-incentivise viable companies going through hard times from adopting measures when they could do so in time.

The time in which to re-negotiate both refinancing agreements and out-of-court agreements for payment have likewise been extended (both are pre-insolvency instruments), as have the insolvency arrangements themselves. Additionally, the procedural measures that streamline the processes, such as preferential processing and the promotion of out-of-court auctions, have also been extended until 31 December 2021.