Articles 269 et seq. of the Spanish Insolvency Act set out a classification of claims that is useful both for lawyers specialising in insolvency proceedings and for those taking the appropriate steps to wind up a company in Spain.
In insolvency proceedings, privileged claims are paid first — these are claims that take priority over others. They include, for example, employment claims, tax claims, and outstanding mortgage claims. Ordinary claims, which carry no priority, are paid thereafter. In the case of a mortgage claim, only the amount already due would be paid, not the total outstanding mortgage debt.
Written by Josep Conesa
Employment and insolvency lawyer
PRIVILEGED CLAIMS:
- Specially privileged (attached to specific assets or rights) Art. 269 of the Insolvency Act
- Mortgage: voluntary or statutory (Articles 78 and 79 of the General Tax Act), over real or movable property, or with a non-possessory pledge over mortgaged or pledged assets (including accrued interest)
- Antichresis: over the fruits of the encumbered property.
- Refactionary liens: over the assets subject to repair or construction works, including those held by workers over items they have produced, while such items are owned by or in the possession of the insolvent debtor.
- Financial lease instalments or deferred-payment purchase instalments for movable or immovable property, subject to a termination clause for non-payment.
- Security over book-entry securities over the encumbered securities.
- Credits secured by pledge (…).
- General: (affecting the debtor's entire estate) Art 280 LC
- Wages (not classified as specially privileged, e.g. where not secured by mortgage):
- a) minimum wage (SMI) x 3 x the number of days of outstanding wages.
- b) Compensation arising from contract termination, capped at minimum wage (SMI) x 3.
- Compensation for work-related accidents arising prior to the insolvency declaration.
- Social Security capital cost and surcharges arising prior to the insolvency proceedings.
- Tax withholdings and Social Security withholdings required by law.
- Claims of self-employed individuals arising from personal services and claims by authors for the assignment of exploitation rights: accrued during the 6 months prior to the insolvency declaration.
- Tax, Public Law and Social Security claims up to 50%, after deducting those with special privilege, those under point 2 of this article (withholdings, etc.), and subordinated claims.
- Non-contractual civil liability: excluding uninsured personal liability, which shall be treated in accordance with Art. 91.4.
- Credits arising from funds received under refinancing agreements (Art. 71.6, and to the extent not recognised as a claim against the insolvency estate).
- Claims of the creditor who petitioned for insolvency proceedings and which are not of a subordinated nature, up to 50%.
- Wages (not classified as specially privileged, e.g. where not secured by mortgage):
ORDINARY CLAIMS:
- Those that are neither privileged nor subordinated.
SUBORDINATED CLAIMS:
- Late-filed claims: these shall not be classified as subordinated and shall be ranked accordingly, except for those specified in Art. 92.1.
- Those which, by contractual agreement, have subordinated status.
- Surcharges and interest of any kind, except for claims secured by a real guarantee, up to the value of that guarantee.
- Claims arising from fines and other financial penalties.
- Claims held by parties with a special relationship to the debtor, except those specified in Art. 92.5º (shareholders).
- Claims in favour of any party declared in a ruling to have acted in bad faith in a challenged transaction.
- Claims arising from reciprocal obligations where the court finds that the creditor has repeatedly obstructed performance of the contract to the detriment of the insolvency proceedings.
against the insolvency estate:
Article 242. Payment of claims against the insolvency estate: Claims against the insolvency estate shall be paid out of assets and rights not subject to payment of claims with special privilege.
- Wages for the last 30 days of actual work prior to the insolvency declaration, up to a maximum of 2x the Spanish national minimum wage (SMI).
- Court costs and expenses necessarily incurred for:
- filing and declaration of insolvency proceedings,
- adoption of interim measures,
- publication of court decisions.
- Legal assistance and representation of the debtor and the insolvency administrator throughout the entire proceedings (with the exception of costs arising from appeals lodged against the court's decisions that are wholly or partially dismissed with an express costs order).
- Court costs and expenses (except as provided for in cases of withdrawal from contract, admission of claim, settlement, and separate defence by the debtor and, where applicable, up to the quantitative limits established therein).
- Claims arising from a costs order made as a result of the dismissal of actions brought or appeals lodged with the authorisation of the insolvency administrator, or as a result of an admission of claim or withdrawal from contract likewise carried out with the authorisation of the insolvency administrator. In the case of settlement, the terms agreed between the parties regarding costs shall apply.
- The remuneration of the insolvency administrator.
- Maintenance obligations owed to the debtor and to persons in respect of whom the debtor has a legal duty of support.
- Claims generated in the course of the debtor's professional or business activity, including employment claims relating to that period, as well as compensation for dismissal or termination of employment contracts occurring after the declaration of insolvency.
- Those which, in accordance with this Act, arise from obligations owed by the debtor in insolvency proceedings, including restitution and compensation obligations.
- Payment of claims secured by special privilege without realisation of the affected assets or rights, claims relating to the reinstatement of contracts or the avoidance of eviction proceedings, and any others provided for in this Act, corresponding to amounts already due and future amounts falling due and payable by the debtor.
- In the case of insolvency rescission of acts performed by the debtor, those corresponding to the return of consideration received by the debtor, unless the ruling finds bad faith on the part of the holder of that claim.
- Obligations entered into during the proceedings by the insolvency administration, or — with its authorisation or consent — by the debtor subject to supervision.
- Obligations arising by operation of law or from non-contractual liability of the debtor incurred after the commencement of proceedings.
- Claims granted to the debtor prior to the opening of the liquidation phase to finance the viability plan required for the performance of the arrangement approved by the court.
Those which the law expressly designates as such.
Contingent claims:
- Contingent claims: claims that are subject to ongoing litigation. in accordance with Article 270.1 of the Spanish Insolvency Act (TRLC) and the Supreme Court Judgment 1222/2019 of 11 April 2019, such claims have no fixed amount of their own and therefore do not accrue interest.
- Costs: in accordance with the ruling of the Supreme Court, First Chamber (Civil Division), ruling 448/2019 of 18 July 2019, Appeal No. 3935/2016, costs would constitute an ordinary claim or a claim against the insolvency estate, given that the insolvency administrator (AC) represents the debtor and cannot be held liable for costs, as it is not a party to the proceedings but acts in defence of the insolvency estate. Accordingly, enforcement proceedings cannot be brought against the insolvency administrator in a personal capacity, since it does not act in its own interest.
It is worth noting that a debtor company — even without a director — may pursue an ongoing dispute, because the suspension of its management powers does not affect its power of representation. Specifically, a company that brought a claim before being declared insolvent — which results in the suspension of the exercise of its proprietary powers — retains representation in those proceedings on behalf of the insolvency estate until it is replaced by the insolvency administration; and after judgment is handed down, provided that replacement has not yet taken place, it remains entitled to lodge appeals with the consent of the insolvency administration. This is confirmed by the Supreme Court in its ruling of 1 June 2022, which — in line with its earlier ruling of 15 October 2018 — establishes that "in respect of proceedings brought after the declaration of insolvency by the supervised debtor with the requisite authorisation of the insolvency administration, if at the time the first-instance ruling is handed down the suspension of proprietary powers has been ordered as a result of the opening of liquidation, the insolvency administration is entitled to appear and apply for procedural substitution of the debtor".
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