Legal Issues to be considered by Purchasers of Distressed Debt in Spain

In Spain the sale and transfer of credits is generally governed by Articles 1526 to 1537 of the Civil Code (the "Code"), but it is important to bear in mind other statutory provisions which may provide with formal requirements and/or limitations which may be applicable to a transfer. The Insolvency Act (the "Act") also plays a key role as it provides with certain particularities for transactions carried out once the Debtor has entered into an insolvency procedure and determines the restructuring procedure within an insolvent company. Also the ranking of the purchased credit (and whether the ranking of the seller is maintained after the transfer) in a potential insolvency of the debtor is fundamental when acquiring distressed debt.