REGIONAL COMMITTEES: EMEA
The European Harmonization of Creditors’ Committees: A View from Spain
By Marta Flores
On 7 December 2022, the European Commission made public its proposal for a directive harmonising certain aspects of insolvency law( hereinafter, the“ Proposal”). Said Proposal ultimately seeks to offer more certainty and create a common minimum standard of insolvency regimes across Member States, advancing in the Capital Markets Union and thus encouraging more effective cross-border investment.
To enhance the efficiency of insolvency proceedings, reduce their duration and increase the recovery value for creditors, the Proposal focuses on three strategic dimensions of insolvency law, namely:( i) maximising the recovery value of the debtor ' s assets for creditors;( ii)
32 improving the efficiency of proceedings and( iii) the predictable and equitable distribution of the recovery value among creditors. Action along these three strategic axes has led the Commission to establish minimum harmonisation standards in relation to a range of highly heterogeneous and scarcely interrelated matters, such as avoidance actions, asset tracing, pre-pack procedures, duties of administrators in relation to the commencement of insolvency proceedings, simplified liquidation procedures for microenterprises and creditors ' committees.
In Spain, creditors’ committees sound exotic and vintage. They sound exotic because, although creditors ' committees are a common body in other legal systems, in Spain they have never been a necessary body in insolvency
proceedings. And creditors’ committees also have a vintage touch because the attempts to introduce them in Spain date back to the Preliminary Draft of the Insolvency Law of 1983 and the Proposal for the Preliminary Draft of the Insolvency Law of 1995. However, despite their presence in these pre-legislative texts, the introduction of creditors ' committees was finally discarded in the Spanish Insolvency Act of 2003. This was not an oversight, but a legislative policy choice: the Spanish legal system has omitted creditors ' committees in a totally conscious manner.
That is why, from a Spanish perspective, it is startling that, of all the substantive insolvency matters that could be harmonised, the European pre-legislator has opted precisely for harmonising creditors ' committees. But what is more: the inclusion of creditors ' committees among the matters to be harmonised is equally striking because they have been praised and criticised in equal parts.
Their advocates insist on the scarce or directly non-existent participation of the majority of creditors in insolvency proceedings. The reasons are fundamentally economic: in most cases, the prospects for the satisfaction of claims do not compensate the costs( in terms of money and time) involved in actively participating in the proceedings. Only creditors with larger claims have incentives to participate more actively in the procedure.
Precisely due to responding to such a clear economic rationale, the need for a committee representing creditors in the day-to-day running of the insolvency proceedings was historically recognised very early on. Indeed, there is evidence of the existence of the figure already in the statutory law of medieval Italian
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