The European Court upholds Spain's refusal to write off public debts in insolvency proceedings of individuals

On April 11, the Court of Justice of the European Union (CJEU) issued a judgment that clarified the doubts that some Spanish courts had as to whether or not the exclusion of Public Law claims, i.e., claims against the Treasury and Social Security, fundamentally, contravened the rules of Community Law.

Well, the Luxembourg Court has confirmed and defended that the Spanish Insolvency Law of September 2022, which transposed the Community Directive on restructuring and insolvency, does not exclude/condone, or only partially excludes/condone, the debts of insolvent individuals who are in a state of insolvency proceedings against the Tax Authorities and Social Security.

Specifically, this ruling clarifies that the Member States may exclude from the exemption of debts listed in the European Directive the claims they deem appropriate, provided that such exclusion is duly justified under the law of each State.

In the case of our country, the exclusion of public credit in the exoneration of liabilities is not total, allowing a remission of a maximum of €10,000 in debts owed to the Tax Authorities and another €10,000 in debts owed to the Social Security.

This judgment of the Court of the European Union has its origin in a preliminary question raised by the Provincial Court of Alicante, which in turn has its origin in a lawsuit brought by two insolvent individuals, to whom the judge of First Instance granted a waiver of debts excluding Public Law and maintenance claims in the amount of €192,366. Said insolvent parties appealed before the Provincial Court of Alicante in order to have said public credit included in the EPI (exoneration of unsatisfied liabilities).

Feliu Martorell Brotad
Illeslex Abogados

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Feliu Martorell Brotad

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