Analysis of Insolvency Proceedings in Spain Against the Backdrop of the COVID-19 Crisis: Insolvency Proceedings, Pre-Insolvency Arrangements and the Insolvency Moratorium

36 Pages Posted: 8 Dec 2020

Date Written: November 13, 2020

Abstract

The inefficiency of Spanish insolvency proceedings – evidenced by their length and reflected in the fact that non-financial corporations and sole proprietors make limited use of both insolvency proceedings and pre-insolvency arrangements – is a structural shortcoming of the Spanish economy. It is a problem that has become particularly important against the backdrop of the COVID 19 crisis and the severe impact it is having on the financial situation of Spanish firms, despite the broad range of public measures introduced to mitigate it. This document analyses the functioning of the insolvency system, examines the pros and cons of the insolvency moratorium currently in place and proposes various alternatives that could make the system more efficient when the moratorium expires at the end of the year.

Keywords: insolvency proceedings, pre-insolvency arrangements, insolvency moratorium, business activity, debt discharge, court congestion

JEL Classification: G33, K35, H12

Suggested Citation

García-Posada, Miguel, Analysis of Insolvency Proceedings in Spain Against the Backdrop of the COVID-19 Crisis: Insolvency Proceedings, Pre-Insolvency Arrangements and the Insolvency Moratorium (November 13, 2020). Banco de Espana Occasional Paper No. 2029, Available at SSRN: https://ssrn.com/abstract=3729965

Miguel García-Posada (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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