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Knowledge Management

May 23 2023

Civil Law

Royal Decree-Law 5/2023 of 28 June modifies the civil cassation appeal, as well as other procedural rules. It came into force at the end of July this year, although the law provides for a transitional regime. Among other measures, the law includes a new regulation of the civil cassation appeal, including that provided for in the Draft Law on Procedural Efficiency Measures for the PublicJustice Service, and other amendments to the Civil Procedure Act.

Structure of the new cassation appeal

Art 477.1: Judgments subjects to appeal in cassation:

  • Judgments that put an end to the second instance issued by the provincial courts.
  • Decisions and sentences handed down on appeal in proceedings on the recognition and enforcement of foreign judgments, when the right to appeal is recognized in the corresponding treaty, convention or regulation of the European Union.

    Art 477.2 Requirements:
  • To have an interest on the case.
  • Civil judicial protection of fundamental rights.

    The possibility of accessing the cassation appeal if the amount of the case was greater than €600,000 is eliminated.
    Who will decide on the appeal? It will correspond to the First Section of the Supreme Court. This is unless the appeals are against decisions of the civil courts seated in the Autonomous Community.

    Procedure:
    It shall be brought before the court which delivered the decision within 20 days. The court that receives it decides whether or not to accept the appeal.
  • If it accepts it, the appeal is deemed to have been lodged.
  • If the requirements are not met, an order dismissing the appeal is issued.
    Novelty in the procedure: The parties will not participate in the admissibility or inadmissibility part of the appeal.

Format:

  • An appeal shall be divided into grounds of appeal.
    o Different offences may not be combined in the same different offences may not be joined in the same ground of appeal.
  • Each ground of appeal shall begin with a heading, which shall contain the precise wording of the rule infringed and a summary of the infringement committed rule infringed and a summary of the infringement committed.
    o The grounds of each plea shall be set out in the grounds of appeal, without departing from the essential content of the heading.
  • The maximum length of the appeal shall not exceed 25 pages.

Bankruptcy law

Barcelona Commercial Court no. 2 has issued judgment no. 26/2023, approving the CELSA Group’s Restructuring Plan. This is a highly relevant judgement, as it discusses the conflict of interests arising from the control of the Group between the shareholders and the financial creditors, most of whom are investment funds dedicated to the purchase of debt assets.

The restructuring plan has gone through several stages, building relevant doctrine on the new dynamics of pre-bankruptcy restructuring after the reform approved by Law 16/2022 of 5 September. The judicial approval of the Restructuring Plan extends its effects to the dissident classes of creditors, on the understanding that the legal conditions for this are given:

  • The amount of the debt is much higher than the value of the company.
  • With the creditors’ proposal, the viability of the Celsa Group is assured, qualifying it as the only viable alternative in the medium term.

This result has been made possible following the reform of the TRLC to transpose Directive 2019/1023 on restructuring and insolvency. The new regime, which replaces the old refinancing agreements and out-of-court payment agreements with Restructuring Plans, is designed to enable companies to anticipate an insolvency situation and restructure their debt with creditors. Among the measures, the Spanish legislator has given legal status to the possible imposition of a debt-toequity conversion despite the opposition of the shareholders of the company concerned.

The judgment contains certain aspects that will be useful for the future elaboration of Restructuring Plans:

  • The judge uses the term “joint and several” to refer to the sacrifice made by all classes of creditors.
  • For the judge, it is perfectly lawful for market operators to take investment decisions based on interests other than those of the company’s good purpose, although in this case those interests coincided with those of maintaining the viability and solvency of the group, since the alternative would lead CELSA into insolvency.
  • The Restructuring Plan can go ahead without the approval of the shareholders. In this ruling, it is argued that the new wording of the TRLC deliberately leaves the debtor and the shareholder on the sidelines: through a teleological interpretation of articles 627 et seq. of the TRLC, the speed of the procedure and the best interests of the company, the shareholders and the market must take precedence. The shareholders will tend to hinder
    the application of a Plan that could alter their representation in the share capital, as is the case here. For this reason, the Judge recalls that the interests of the company’s viability outweigh those of the shareholders.
  • The importance of accompanying the Restructuring Plan with a financial report on the valuation of the company is highlighted because if the debt exceeds the value of the capital, the TRLC allows creditors to keep the company, leaving the shareholders out of the money.

Corporate Law

The new regulation, published in the Official State Gazette (BOE hereinafter) on July 12 and which entered into force on September 19th, creates the registry, which will be electronic, central, and unique throughout the national territory. The Central Registry of Real Estate Titles (hereinafter, “RCTIR”) is created, and its operating regulations are approved.

In the first place, the beneficial owner is understood to be:

  • Natural person or persons who directly or indirectly control more than 25% of the capital or voting rights of a company.
  • In the absence of such beneficial owner, such control is deemed to be exercised by the director(s).

A series of additional information requirements are established, thus increasing certain data that must be shared with the administration, specifically the e-mail address of all those considered to be beneficial owners.

Objectives:

Its objective is to collect and publicize information on beneficial ownership of all Spanish legal persons and non-legal entities or structures (such as trusts) that have the seat of their effective management or their main activity in Spain, or that are managed or administered by natural or legal persons resident or established in Spain or that, not being managed or administered from Spain or another European Union (EU) State, nor registered by another EU State, intend to establish business relations, carry out occasional operations or acquire real estate in Spain.

Information to be included in the register:

Name, surname, date of birth, identification document (Passport or DNI), country of issue of the identification document, country of residence, nationality, criteria that consider that person as the real owner and e-mail.

Penalties:

The sanction in case of non-compliance will be the closure of the registration sheet and financial penalties are foreseen which have not yet been determined.

Country

Spain

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