Insolvency proceedings. Succession of companies

The new Insolvency Act establishes certain obligations of the acquirer of a company, and in this way 224.1.3 of the TRLC only declares the liability of the acquirer in the labour and social security credits "corresponding to the workers of that production unit in whose contracts the acquirer is subrogated.

The previous Insolvency Act did not establish it in this way, and the liability of the acquirer was limited to the employment contracts in which it had been subrogated, but the transfer of liabilities operated fully in the terms of art. 44 of the revised text of the Workers' Statute Law, approved by Royal Legislative Decree 2/2015, of 23 October.

The acquirer of a production unit must take special care in the acquisition process, not only with regard to the offer price, but also with regard to the possible credit responsibilities in which it is subrogated as a consequence of the succession of the company. The buyer must take special care in relation to the insolvency proceedings in which the possible company acquired is involved in order to establish the exact amount of the cost of the acquisition, which will not simply be the price, but also the insolvency claims and claims against the estate in which he will be subrogated ope legis.

Legally, the revised text of the Insolvency Act, approved by Royal Legislative Decree 1/2020, of 5 May (TRLC), enshrines in Article 422 the principle of the rule of the whole, whereby the establishments, operations and productive units of the active mass must be disposed of as a whole. This principle is projected in an admonition to the insolvency administrator to include it in the liquidation plan (art. 417.2 TRLC).

As for the disposal procedure, the preferred procedure for the disposal of the production units is the auction (art. 215), without prejudice to the fact that occasionally the procedure of direct disposal or disposal by means of a specialised entity may be used.

Consequently, the possible acquirer of the production unit must necessarily use business criteria to determine the economic cost of acquiring the production unit, which, as we shall see below, does not necessarily have to coincide with the bid offered at the auction or with the offer communicated to the insolvency administration in the case of direct disposal or to the specialised entity in charge of the operation. One of the keys to setting the acquisition cost is to be found in art. 224.1.3 of the TRLC, for the case of company succession, a hypothesis in which the amount of the labour and social security credits in which the transferee will be subrogated must be added to the bid or offer in order to correctly estimate the cost of the purchase of the production unit. In this respect, an important observation.

The possible legal claim by the workers requesting the extension of liability to the acquirer of the production unit for labour claims not satisfied in the insolvency proceedings - even after the insolvency proceedings have ended - will be subject to examination by the labour courts. The latter has already ruled on the transfer of liability to the acquirer of the production unit for the totality of the salary and compensation debts of workers in which the transferee has not been subrogated (STS 617/2019, of 11 September).

Contact our legal department at our Madrid law firms specialising in insolvency law.