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The preliminary ruling on the Second Opportunity Law

The preliminary ruling on the Second Opportunity Law Publicado: 10-08-2023

Since the transportation of Directive 2019/1023 of the European Parliament the state of insolvency has undergone significant changes. The implementation of this regulation has generated doubts in it`s application to the Spanish Courts. Several questions have been referred to the Court of Justice of the European Union (CJEU) for a preliminary ruling on the approach proposed by this directive and its transportation law in Spain. At Gentile Law, expert lawyers in insolvency and restructuring, we will explain what the Second Opportunity Law consists of and what is the recent preliminary ruling on this issue. 

(i) What is the Second Opportunit Law and what are the new requirements? 

The Second Opportunity Law aims to help individuals and self-employed people who are unable to pay their debts to remain in the economy. This law introduced a new payment reorganization plan, called "exoneration of unpaid liabilities" (EPI in Spanish), a tool which purpose is to perform restructurings without having to be liquidated. The requirements of this law are the following: 

1. To not have been declared bankrupt in insolvency proceedings

2. To not have been declared an affected person in an insolvency judgement in the 10 years prior to the application 

3. To not have benefited from this law during the last 5 years

4. That the total obligation does not exceed 5 million euros 

5. To not have been sanctioned in the last 10 years for a tax or social security infringement

6. To have acted in good faith 

(ii) The question reffered to the CJEU for a preliminary ruling

The Tax Agency refused to grant the second opportunity benefit to a person who had outstanding fine for non-payment of rent for is business, which was considered by the Tax Agency to be very serious offence. The debtor argued the roughness of this measure and interpretation since, as is recorded in the case file, the amount to be paid was a small part of the total amount he had requested. 

In response to this event, the Commercial Court No. 10 of Barcelona has referred a preliminary question to the CJEU to determine the correct interpretation of the Directive transposed by the Law 16/2022, of 5 September. 

The CJEU will determine whether an infringement of this type, even if committed negligently, carries the consequence of losing the second opportunity benefit. 

(iii) Conclusion 

The CJEU will clarify whether a negligent action is equivalent to a fraudulent or dishonest action regarding second opportunity benefits. It is therefore of great interest that the CJEU clarifies the effect of tax offences regarding the second opportunity benefit and whether the interpretation of the Tax Agency is correct. If the Tax Agency`s decision is confirmed, many people may lose the right to the benefit provided for in the Second Opportunity Law due to negligent tax offences. 

Marta Batalla Eguidazu 


+34 684 46 04 26

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