The creditor protection regime within the framework of structural modifications

Previously, creditors had a right of opposition, which they could exercise if their claims had not been secured in the context of a structural modification of the debtor company.

However, Royal Decree-Law 5/2023, of 28 June, on the transposition of European Union Directives on structural modifications of commercial companies, among others (the "RDL 5/2023") has modified the creditors' protection regime, replacing the creditors' right of opposition with a new regime of guarantees.

In particular, RDL 5/2023 regulates the common provisions for the protection of creditors and those specific to each of the types of structural modifications, as well as the creditors' protection regime for European cross-border structural modifications.

Common provisions for creditor protection

The requirements for benefiting from the creditor guarantee scheme are as follows:

• To be a creditor of the company participating in the structural modification;
• The creditor's claims arose prior to the publication of the project on the structural modification (or, if publication of the project is not required, prior to the publication of the resolution approving the structural modification or the individual communication of that resolution to the creditor); and
• The creditor has notified the company of its disagreement with the guarantees offered or the lack thereof in the project of the structural modification.

Procedural options

Within one month for internal transactions (and three months for cross-border transactions) from the publication of the project on the structural modification, a creditor has three the following options:

• If an independent expert's report has been issued considering that the guarantees are inadequate, the creditor may apply to the Commercial Registrar of the company's registered office in order for him to notify the company of this within five days, so that the company may extend the guarantees or offer new ones within 15 days.

  If the creditor is still unsatisfied, the creditor has a period of 10 days to apply to the competent Commercial Court for the guarantees to be provided by the company.

• If an independent expert's report has been issued considering that the guarantees are adequate, the creditor may apply to the Commercial Court, which will conduct the procedure and make the appropriate notification to the Commercial Registrar.

• If no independent expert's report on the creditors' guarantees has been issued, the creditor may request the Commercial Registrar to appoint an independent expert within five days, within three months of the publication of the project. The expert will have 20 days to issue a report on the adequacy of the guarantees of all creditors who have requested it.

  If the expert report considers the guarantees to be inadequate, the provisions of option A) above shall apply, and if it considers them to be adequate, the provisions of option B) above shall apply.

  In any event, the exercise of creditors' rights shall not paralyse the structural modification or prevent its registration in the Commercial Registry.

Adequacy and effectiveness of guarantees

In order for guarantees for creditors' claims to be granted or extended, creditors must prove that the satisfaction of their claims is at risk due to the structural modification and that they have not obtained adequate guarantees from the company.

In the absence of evidence to the contrary, guarantees are presumed to be adequate when the independent expert's report declares their adequacy, or the company has issued the financial disclosure statement.

Specific provisions

• Transformation. Shareholders who assume personal and unlimited liability for the company's debts by virtue of the transformation shall also be liable for debts prior to the transformation, unless the company's creditors have expressly consented to the transformation.  The common provisions on creditors' protection do not apply to internal transformations.
• Merger. The shareholders personally liable for the debts incurred prior to the merger by the merged companies that are extinguished by the merger, shall continue to be liable for such debts, unless the company's creditors have expressly consented to the merger.
• Spin-off. The companies benefiting from the spin-off shall be jointly and severally liable up to the amount of the net assets attributed to each of them in the spin-off (and the company being spun off itself, if it subsists, up to the amount of the net assets remaining in it) for debts arising before the publication of the spin-off project and not yet due which have been assumed by a benefiting company towards the creditors of the company being spun off.
• Global transfer of assets and liabilities. If unpaid debts arose before the publication of the assignment project, are not due at that time and have been assumed by an assignee vis-à-vis the creditors of the assignor company, the other assignees shall be jointly and severally liable for the debts up to the limit of the net assets attributed to each of them in the assignment of assets and liabilities. Likewise, the shareholders are liable up to the limit of what they have received as consideration for the assignment of assets and liabilities, or the company itself if it has not been extinguished, up to the amount of the net assets remaining in the company.

Limitation periods for liability

• Transformation and merger. Liability will expire five years after the publication of the structural modification in the Spanish Official Gazette of the Commercial Registry ("Boletín Oficial del Registro Mercantil").
• Spin-off. The joint and several liability of the companies involved in the spin-off shall expire after 5 years.
• Global assignment of assets and liabilities. The joint and several liability of the assignees and the shareholders shall expire after 5 years.