- ICO guarantee lines can be granted until 30 June 2022, instead of ending this year.
- The insolvency moratorium is extended to that date: an insolvent debtor is not obliged to file for insolvency proceedings.
- Losses for 2021 will also not count towards the cause for dissolution, and foreign-investment screening continues until the end of 2022.
On 23 November 2021 the Council of Ministers approved Royal Decree-Law 27/2021, published in the BOE the following day, which extends certain economic measures supporting the recovery that were due to expire at the end of the year. It came into force on 25 November. The rule is adopted in line with the extension of the European Union’s Temporary State Aid Framework and affects financing for companies and the self-employed, insolvency law and foreign investment.
According to Government figures, since the launch of the liquidity guarantee line in March 2020, and of the second line for investment and liquidity, more than 1.1 million operations have been formalised with guarantees of around €101.9 billion, which have mobilised close to €134 billion of financing (figures at 18 November 2021). The Government ranks them among the most widely used lines in Europe, and their extension was expected by many companies.
Guarantees and aid
The self-employed and companies will be able to keep accessing financing guaranteed by the Official Credit Institute (ICO) until 30 June 2022 to cover liquidity needs or finance investment projects. The public guarantee allows banks to grant loans that, without that backing, would be harder or more expensive, and the extension avoids an abrupt cut-off of support at the end of the year.
The decree also extends to 30 June 2022 the deadline for the autonomous communities to return unspent funds from the COVID Line of direct aid, so that they have more time to resolve appeals against closed calls. The recapitalisation funds managed by SEPI and COFIDES remain in force until the same date.
Insolvency moratorium and losses
In insolvency matters, the decree extends to 30 June 2022 the exemption from the insolvent debtor’s duty to file for insolvency, and maintains the refusal to admit petitions for compulsory insolvency filed by creditors. It is an exceptional measure designed to give viable companies room while the reform of the insolvency law is being processed.
The exclusion of losses for the purposes of the legal cause for dissolution of companies, which already benefited 2020, is also extended to 2021. In practice, a company whose net equity has fallen below half of its capital because of pandemic losses will not yet have to dissolve or recapitalise. After the deadline, the ordinary regime will apply again, and it requires quick action.
Foreign investment and what to review
The rule extends to 31 December 2022 the suspension of the liberalisation regime for certain foreign direct investments in strategic sectors. It affects those from the European Union and the European Free Trade Association in listed companies and, in unlisted ones, those exceeding €500 million, which still require prior authorisation to protect security and public order.
Companies that used guarantees should plan their repayment and the possible renewal of financing, and not wait until the last moment. And those in difficulty should not read the moratorium as permission not to act: directors’ duties, financial reporting and negotiation with creditors remain important. Each case should be reviewed with corporate-law advice.
An extension gives room, but it does not replace a plan: the time gained is worth something only if it is used to put the company in order.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
