I. – MOST SIGNIFICANT CHANGES REGARDING BANKRUPTCY

FILING FOR BANKRUPTCY

Up to and including 31 December 2021, any debtor who is insolvent is not obliged to file for bankruptcy, irrespective of whether or not they have informed the competent court that they have opened negotiations with creditors to reach a refinancing agreement, an out-of-court payment settlement or adopted a proposal of early composition agreement.

EXTENSION OF DEADLINE FOR RENEGOTIATION

Up until 31 December 2021, the insolvent debtor may submit a proposal to change the refinancing agreement or arrangement or, in the case of refinancing agreements, submit a new one.

II. – GRANTS FOR BUSINESSES AND THE SELF-EMPLOYED

DIRECT COVID GRANT SCHEME FOR THE SELF-EMPLOYED AND BUSINESSES

A direct Covid Grant Scheme has been created for the self-employed and businesses to support solvency and reduce indebtedness in the private sector.

Terms of the grant

A. RECIPIENTS

Non-financial companies and self-employed people worst hit by the pandemic whose tax residence is in Spanish territory or, if they are non-resident non-financial companies, they must operate in Spain through a permanent establishment.

They must fall within the sectors defined in Annex I of Royal Legislative Decree 5/2021.

Annual turnover must have fallen by more than 30% compared with 2019, according to the tax return or as verified by the Administration through VAT or equivalent indirect taxation in 2020.

Employers or professionals who apply the objective estimate method to income tax and fall within the sectors defined in Annex I of Royal Legislative Decree 5/2021.

In the case of a consolidated group that pays corporation tax on a consolidated taxation basis, said group will be considered to be a single taxpayer recipient, rather than each of the entities in the group, so the turnover that is taken into account when determining if there has been a reduction in activity will be the result of adding up the turnover of each of the entities that make up the group.

Any employers or professionals who meet the aforementioned requirements and who, in the income tax return filed in 2019, declared a financial loss from their economic activities, having applied the direct estimate method to determine such losses or, where applicable, during that tax year, had a negative taxable income for corporation tax or non-resident income tax, before applying the capitalisation reserve and offsetting tax loss carryforwards, will not be recipients.

The requirements stipulated in point iv below must be met.

B. NATURE AND PURPOSE OF THE GRANT

Final in nature and it must be used to pay a debt and make payments to suppliers and other creditors, be they financial or otherwise, in addition to fixed costs incurred by eligible self-employed people and companies.

C. AMOUNT ALLOCATED TO THE COVID GRANT SCHEME

7 billion euros.

COVID FINANCIAL DEBT RESTRUCTURING SCHEME

Public support measures have been introduced, in addition to a Good Practice Code which, among other things, promotes coordination between financial institutions in adopting measures that help to strengthen the solvency of companies and self-employed people whose registered addresses are in Spain and which are experiencing a temporary asset imbalance as a result of a fall in revenue due to the COVID-19 pandemic.

A. SCOPE

Companies and self-employed people with their registered addresses in Spain which have entered into government-guaranteed financing arrangements with credit institutions or any other institution supervised by the Bank of Spain, between 17 March 2020 and the date of publication of Royal Legislative Decree 5/2021.

Moreover, the company or self-employed person must have previously requested the extension of the maturity dates and grace periods set forth in Royal Legislative Decree 34/2020 and the latter must have informed the ICO that it is implementing such measures.

Other requirements that must be met will be established by Agreement of the Council of Ministers.

The requirements stipulated in point iv below must be met.

B. AMOUNT ALLOCATED

3 billion euros.

C. CODE OF GOOD PRACTICE

Through an Agreement of the Council of Ministers, a voluntarily adopted Code of Good Practice is to be approved by credit institutions.

RECAPITALISATION FUND FOR BUSINESSES HIT BY COVID

The aim of the Recapitalisation Fund for Businesses hit by COVID is to provide temporary public support based on profitability, risk and sustainable development impact criteria, to strengthen the solvency of companies with their headquarters in Spain, with eligibility criteria to be determined by Agreement of the Council of Ministers.

It has been allocated a total fund of 1 billion euros.

Additionally, the recipients must meet the requirements that appear in point iv below.

ADDITIONAL ELIGIBILITY CONDITIONS FOR BUSINESSES AND THE SELF-EMPLOYED

They must not have been sentenced, in a final judgement, to lose their right to claim public subsidies or grants or convicted of other crimes such as malfeasance or corruption.

They must not have given rise to the final termination of contracts entered into with the Administration due to wrongful conduct.

They must be up-to-date with all payment obligations pertaining to the repayment of public subsidies and grants and be up-to-date with all tax and Social Security payments.

They must not have filed for voluntary bankruptcy or been declared insolvent in bankruptcy or insolvency proceedings (unless an arrangement has come into force, they are not subject to receivership and they have not been disqualified and the set period of disqualification has not yet ended).

They must not have their tax residence in a country or territory that is classified as a tax haven.

Furthermore, the recipients agree:

To continue with the activity for which the grant was awarded until June 2022.

Not to pay dividends during 2021 and 2022.

Not to approve wage increases for senior management for 2 years following implementation of any of the measures.