GRANADA COMMERCIAL COURT NO. 1 RULING OF MARCH 17, 2014; LOGROÑO COURT OF FIRST INSTANCE NO. 6 DECREE OF APRIL 25, 2014; BARCELONA COURT OF FIRST INSTANCE NO. 38 DECREE OF MAY 14, 2014; AND PONTEVEDRA COMMERCIAL COURT NO. 2 DECISION OF JUNE 6, 2014: FIRST DECISIONS ON THE SUSPENSION OF ENFORCEMENT PROCEEDINGS UNDER ARTICLE 5 BIS OF THE INSOLVENCY ACT AFTER ROYAL DECREE-LAW 4/2014
The commercial and first-instance courts handed down their first decisions on the suspension of enforcements due to the presentation of the notification of the starting of negotiations established under article 5 bis of the Insolvency Act.
The freezing or suspension of enforcements established under article 5 bis was one of the most significant new aspects introduced by Royal Decree-Law 4/2014 7 into the Insolvency Act. However, its wording is raising doubts both in doctrine and case law. The first legal decisions on this matter have adopted different criteria regarding the power to determine the necessary nature of the asset and to order the suspension of the guarantees.
The Granada ruling made a systematic interpretation of the precept and considered that the commercial court (the authority competent for the declaration of the insolvency) should decide whether the assets are necessary for (i) the continuance of the debtor’s professional or business activity; and (ii) the fulfilment of the established requirements, although for this it would exclusively assess the debtor’s notification in which the debtor should indicate the assets it deemed necessary to such end. Along the same lines, the court clerk of the Logroño Court of First Instance (court competent for the declaration of insolvency in the case examined) (i) determined the necessary nature of certain assets of the debtor in accordance with the declarations of the latter in the document submitted to these effects; and (ii) agreed to suspend enforcement proceedings heard by another first-instance court, for which it ordered a record of the decision to be transferred to that court. The Barcelona Court of First Instance ordered the suspension of the eviction order in view of the copy of the commercial court’s ruling acknowledging the debtor’s submission of the notification of the starting of negotiations with the creditors. Regarding the necessary nature of the asset, reference was made to the debtor’s argument in the request, explaining it carried out its activity at the premises object of the proceedings.
The decision of the Pontevedra Commercial Court fell within the area of out-of-court enforcements, declaring that article 5 bis of the Insolvency Act could not be used to request the suspension of notarial enforcement, as this precept refers to court enforcement proceedings, and no other legal provision existed enabling it to hand down a legal order suspending such procedure.