sudden course
From the author who already gave us lengthy discussions on media law and telecommunication statutes, comes a bankruptcy law with more than 700 articles. Parliament is poised to approve a committee’s opinion this Thursday after weeks of debate. There was a rush to publish it in the Official State Gazette and turn it into reality, since the starting point was a European directive that needed transposition. The process wasn’t easy. The legislature moved with the speed typical of its Lower House, yet a light appears at the end of the tunnel. The general assembly is expected to grant approval after seven days, then move to the Senate for its usual rapid procedures. This is how El Periódico de España reports it.
Although the bill was costly to craft and the introduction of hundreds of amendments caused jitters among lawyers—an expected challenge in one of the state’s most important services—the discussion repeatedly stalled over a key point: a public loan in the event of company bankruptcy.
Before offering a retrospective to contextualize why this measure sits at the center of attention, it’s worth noting how the negotiating groups resolved some of the confusion. Three groups stood out: United We Can, PNV, and PDeCAT. The first, a coalition partner in the government, started with a bold proposal to cap debt relief at 30,000 euros in bankruptcy scenarios, split into 15,000 euros for Treasury debts and 15,000 euros for Social Security debts. The figure moved downward as consensus proved elusive, with the government seeking a broader drafting threshold. The cap was eventually set so that relief would apply only up to 1,000 euros for Treasury debts and 1,000 euros for Social Security debts, regardless of the balance.
In the end, after repeated textual negotiations, the final article confirms that the maximum amount that self-employed individuals and citizens facing bankruptcy can discharge will be no more than 20,000 euros (10,000 euros for Treasury debts and 10,000 euros for Social Security debts). The procedure works like this: the first 5,000 euros of debt are discharged, and for the remaining balance, relief can reach up to 50%—but the total cannot exceed 10,000 euros. Constraints apply separately for Treasury debts and Social Security debts.
Two examples illustrate how the regime operates. Example 1: a business owner owing 8,000 euros to the Treasury can discharge 5,000 euros plus half of the remaining 3,000 euros, totaling 6,500 euros discharged. Example 2: if the Treasury debt after bankruptcy stands at 12,000 euros, the relief would cover 5,000 euros plus half of the remaining 7,000 euros, totaling 8,500 euros, provided the overall cap of 10,000 euros is not exceeded. These limits apply independently to accumulated Treasury debts and Social Security debts.
sudden course
The scope of the reform introduced in the final text is substantial, especially given the backroom negotiations. At first, the government did not favor the idea of full relief and did not include it in the draft. Entrepreneurs and freelancers pushed for changes, and although some proposals passed, they were not enough. At the project stage, the government sent a draft with a cap of 1,000 euros for Treasury debts and 1,000 euros for Social Security debts. Meetings were held with business groups to assess how far improvements could go.
The involved parties weighed two main arguments. On one side, the European directive that inspired the rule allowed debt relief across all creditor classes, a point stressed by business advocates. They also noted that the Supreme Court had previously endorsed the idea of public debt relief for the self-employed, arguing it gives entrepreneurs a second chance after a failed venture. Sustaining debt relief over time can complicate future efforts.
Expanding the initial limits by tenfold was a clear win for the opposition, though not universally satisfying. According to sources from United We Can, PNV, and PDeCAT, the outcome is acceptable but a higher ceiling would have been preferable. Opinions in PP and Cs diverge, with some sources calling the plan insufficient.
United We Can print
Parliamentary sources shared with El Periódico de España another notable change: the Tax Office signaled that the company approving a restructuring plan would see a discount of not more than fifteen percent of the amount of their ordinary loan. These measures affect a large share of companies entering distress and represent a difficult concession for the opposition.
The Catalan party has become a leading force in democratic memory law, and it has also supported another measure that began its own process this week. While the support of PNV and PDeCAT helps, the negotiators expect continued movement from PP, Cs, and ERC, likely in a spectrum of support and abstention.
Negotiations will continue until the scheduled vote at the end of the plenary, with the Justice Commission set to finalize several points. United We Can sources indicate ongoing talks with the PSOE and other progressive bloc partners about adding social protections to the bankruptcy framework. The direction follows the changes introduced by the party’s allies, which do not always align with socialist priorities. This friction influences the shaping of the final plan. Yolanda Díaz has urged a workers-first approach.
The proposal would prioritize a workers-first rule in case of multiple bids for an acquired company. If a bid is substantially higher, it may prevail unless the winning offer is from a workers’ collective, a cooperative, or a related worker-owned entity that would continue the enterprise. This preference would apply as long as the price difference does not exceed 30 percent.
The government’s supporters emphasize similar aims, though the formal wording of the draft may still be adjusted. A binding written offer from workers seeking to take over the business through a cooperative, employee-owned, or subsidiary structure could be used to ensure a smooth succession.
A comprehensive, detailed, and expansive law is on the horizon. The initial vote is this Thursday, with a second and final vote to follow in the chamber next week. The political agreement has held so far, while the government notes the law is already part of the legislative program.