The extension of the effects of the pre-insolvency communication under article 585 of the spanish insolvency act

Abstract

The notice of the opening of negotiations under Article 585 of the Spanish Insolvency Act (Texto Refundido de la Ley Concursal, TRLC) is essentially instrumental in nature, insofar as it serves a preparatory and facilitative function in establishing the necessary conditions for the debtor’s initial attempt to negotiate a restructuring plan pursuant to Article 614 TRLC to succeed. This is achieved through the deployment of a series of effects that protect not only the debtor, its business and assets, but also the negotiation process itself, thereby facilitating the conduct of negotiations and the adoption of a restructuring plan.

Such effects, initially in force for a period of three months, may be extended for an additional three months in accordance with Article 607 TRLC. This paper examines that extension, including the parties entitled to request it and the applicable procedural framework. It also analyses the duration of such extension, an issue that remains controversial in case law, notwithstanding the apparent clarity of the statutory wording and its legislative background.