Since the entry into force of the current insolvency legislation, culminating in the enactment of Law 16/2022 of September 5, which amended the consolidated text of the Insolvency Act approved by Royal Legislative Decree 1/2020 of May 5, for the transposition of European legislation, some time has passed.
This amendment was eagerly awaited in the sector as it aimed to align Spanish insolvency legislation with European standards, specifically transposing Directive (EU) 2019/1023 of the European Parliament and of the Council of June 20, 2019, on preventive restructuring frameworks, debt discharge, and measures to increase the efficiency of restructuring, insolvency, and debt discharge procedures, amending Directive (EU) 2017/1132 of the European Parliament and of the Council.
Law 16/2022 of September 5 sought to address several issues with the previous insolvency framework, including the delayed filing of bankruptcy proceedings, prolonged duration of insolvency proceedings where a majority (over 85%) ended in liquidation rather than a settlement, and limited use of the second chance mechanism for individuals.
Since the enactment of Law 16/2022, it has been observed that the new insolvency law has led to an increase in "asset-less" bankruptcies affecting companies with minimal resources and virtually no activity. The insolvency process for these cases has been expedited, partly because the appointment of an insolvency administrator occurs upon request by a creditor, resulting in a significant number of cases concluding without the need for an appointed administrator.
Additionally, there has been a notable rise in insolvency proceedings for individuals, including private individuals, self-employed persons, and entrepreneurs, who see the new insolvency regulation as a way to obtain debt forgiveness through the discharge of unpaid debts (E.P.I.). It's worth noting that the term "benefit" ("beneficio") was removed from the legal terminology, as prior to the insolvency reform, this mechanism was colloquially known as B.E.P.I.
In summary, from our perspective, the application of Law 16/2022 of September 5 has been positive overall, as it has streamlined insolvency procedures and enhanced their efficiency. However, concerning the use of out-of-court payment agreements, it must be noted that they have been underutilized, primarily due to the high fixed costs of insolvency proceedings and the limited resources available to creditors.
