Can a restructuring be imposed on those who vote against it? The cram-down of creditors and shareholders
One of the most significant features of the new restructuring regime introduced by Spain's “Ley 16/2022” and by Directive (EU) 2019/1023 is that, on certain conditions, a court-confirmed plan may affect creditors that have not supported it and even, in certain situations, entire classes of creditors or the shareholders themselves. This mechanism —“arrastre” in Spanish, cram-down or cross-class cram-down in English-language terminology— does not mean that a majority may freely impose any solution it wishes. It is conditioned by the correct formation of classes, by the valuation of the business, by the treatment of dissenting creditors and by the comparison with the insolvency alternative. An understanding of these elements is essential to grasping how decision-making power is structured in a restructuring and what legal limits there are on imposing sacrifices on those who vote against.
1.Cram-down as an answer to the need to avoid deadlock
Directive (EU) 2019/1023 starts from the finding that preventive restructuring frameworks must allow plans to be adopted even where not all creditors agree, so as to prevent blocking minorities from frustrating solutions that maximise value for all concerned. Article 10 of the Directive requires Member States to ensure that certain restructuring plans are binding on the parties only if they have been confirmed by a judicial or administrative authority, in particular where they affect dissenting creditors, provide for new financing or involve significant job losses. Article 11 introduces the possibility of confirming plans that have not been approved by all classes of affected parties, provided that conditions are met such as approval by at least one class that would be “in the money” in a liquidation or best-alternative scenario, compliance with the best-interest-of-creditors test and observance of an absolute or relative priority rule.
Law 16/2022, in reforming Book Two of the consolidated text of the Spanish Insolvency Act —the “texto refundido de la Ley Concursal”, TRLC—, has incorporated these mechanisms. Article 635 of the consolidated text sets out the situations in which court confirmation of the restructuring plan is required, among them where the intention is to extend its effects to creditors or classes of creditors that have not voted in favour of the plan or to the shareholders of a debtor that is a legal person; where termination of contracts in the interests of the restructuring is sought; and where the aim is to protect interim financing and new financing against avoidance actions and to grant them priority in payment. Cram-down therefore operates through court confirmation, not through a mere private vote.
2.Class formation and the legitimacy of cram-down
The formation of classes of creditors is the first filter for a legitimate cram-down. Article 622 of the consolidated text provides that creditors holding claims affected by the plan are to vote grouped by classes of claims. Article 623 requires class formation to have regard to the existence of an interest common to the members of each class, determined in accordance with objective criteria, and states that a common interest is deemed to exist between claims of equal rank as determined by the order of payment in insolvency proceedings, the Spanish “concurso de acreedores”. At the same time, it allows claims of the same rank to be separated into different classes where there are sufficient reasons to justify it, having regard to the financial or non-financial nature of the claim, to possible conflicts of interest or to how the claims are to be affected by the plan, and it requires a separate class to be formed for creditors that are small or medium-sized enterprises where the plan imposes on them a sacrifice of more than fifty per cent of the amount of their claim. Article 624 provides that claims secured by security in rem over the debtor's assets are to form a single class, unless the heterogeneity of the assets or rights charged justifies their separation, and article 624 bis provides that public-law claims are to form a separate class among the classes of the same insolvency rank.
This structure reflects the logic of Directive 2019/1023, which requires creditors with a sufficient commonality of interest in the same class to be treated equally and in a manner proportionate to their claims. Correct class formation is essential because cram-down operates class by class: a plan may be approved by some classes and not by others, and confirmation may extend its effects to dissenting classes. If the classes have been formed in a contrived way, grouping together creditors with divergent interests or splitting up homogeneous groups in order to make majorities easier to obtain, the legitimacy of the cram-down is compromised and the plan may be challenged.
Recent court practice has underlined that importance. The provincial appeal court —the Spanish “Audiencia Provincial”— of Pontevedra, in its judgment 179/2023 on the restructuring plan of Xeldist Congelados, analysed class formation in detail and held that the separation of certain creditors into single-member classes was correct, given their status as strategic suppliers and the different treatment they received, but upheld the challenge based on less favourable treatment of the class of ordinary financial creditors, which bore write-downs of 85% against much smaller sacrifices in other classes of the same rank. The Commercial Division of the “Tribunal de Instancia” of Murcia, the new single first-instance court, in its judgments of 9 March 2026 on the restructuring plan of Real Murcia CF SAD, declared the plan wholly ineffective, holding that the class put forward as “in the money” had been wrongly constituted, because the financing provided by the majority shareholder did not meet the requirements of article 242.17 and 280.6 of the consolidated text to be classified as a claim carrying general priority, and so could not serve as the basis for cramming down other classes.
3.Majorities by class and approval of the plan
Once the classes have been formed, decision-making power is exercised through qualified majorities within each class. Article 628 gives voting rights to all creditors whose claims may be affected by the plan, and article 629 provides that the plan is deemed approved by a class of affected claims if more than two thirds of the amount of the liabilities in that class has voted in favour, raising the majority to three quarters where the class is made up of claims secured by security in rem. Article 630 deals with syndication agreements, respecting the contractual rules on the procedure for and the exercise of voting rights and applying the statutory majorities, unless the agreement itself provides for a lower majority to approve the effects of the plan.
These class majorities are the basis on which cram-down is built. A plan may be approved by all classes, in which case the cram-down operates within the class, affecting creditors that have voted against inside a class that has approved the plan. In such cases Directive 2019/1023 requires the best-interest-of-creditors test to be satisfied, that is, that dissenting creditors are left no worse off than under the alternative of liquidation or of the best available solution. The consolidated text reflects this logic in the rules for challenging the confirmation order: article 654 allows the order confirming a plan approved by all classes to be challenged on grounds such as the absence of the requirements for confirmation, a sacrifice manifestly greater than is necessary to secure the viability of the business, or failure to satisfy the best-interest-of-creditors test.
4.Cross-class cram-down and the conditions for it
The most significant innovation is cross-class cram-down, that is, the possibility of confirming a plan that has not been approved by all classes of affected claims and extending its effects to entire dissenting classes. The consolidated text, following the Directive, provides that a non-consensual plan may be confirmed if certain conditions are met. Although the detailed rules are found in articles 639 et seq., the general logic is as follows: the plan must have been approved by a majority of the affected classes, at least one of which is a class of claims that, in an insolvency scenario, would have been classified as carrying special or general priority, or by at least one class that may reasonably be presumed to have received some payment following a going-concern valuation of the debtor. It is this “in the money” class that legitimises the cram-down of lower-ranking classes.
The going-concern valuation of the business is therefore a central element. Directive 2019/1023 requires that, where cram-down is used, the going-concern value of the business be determined and the classes of creditors that would receive payment in a liquidation or best-alternative scenario be identified. The consolidated text gives effect to that requirement by calling, in certain cases, for the involvement of a restructuring expert to value the business and certify which classes are “in the money”. Academic commentators have stressed that this valuation is not an abstract exercise but a tool for allocating voting and cram-down rights in a way that is consistent with the economic position of each class.
Cross-class cram-down is subject to substantive limits. Article 655 of the consolidated text governs challenges to the order confirming a plan that has not been approved by all classes and allows dissenting creditors to challenge it on grounds such as the lack of approval by the necessary classes; that a class is to retain or receive rights, shares or quotas worth more than the amount of its claims; that the challenging creditor's class is to receive less favourable treatment than any other class of the same rank; that the challenging creditor's class is to retain or receive rights, shares or quotas worth less than the amount of its claims while a lower-ranking class or the shareholders are to receive any payment or retain any right, share or quota; or that, where public-law claims are affected, the debtor is not up to date with its tax and social security obligations. Paragraph 3 of the same article allows confirmation to be upheld exceptionally even where the absolute priority rule is not complied with, where this is essential to secure the viability of the business and the claims of the affected creditors are not unjustifiably prejudiced.
5.Cram-down of shareholders and the shift of control
Cram-down is not confined to creditors; it may extend to the shareholders of a debtor that is a legal person where the plan affects their rights. Article 631 of the consolidated text governs the shareholders' decision on approval of the plan and provides that, where the plan contains measures requiring a shareholders' resolution, the rules laid down for the relevant type of company apply, with special features as to notice periods, the agenda, majorities and the rules for challenge. In particular, the resolution is to be adopted with the ordinary statutory quorum and majority, whatever its content, without any enhanced quorum or majority in the articles of association being applicable, and the resolution of the general meeting approving the plan may be challenged only by the route and within the time limit laid down for challenging or opposing confirmation.
Directive 2019/1023 allows shareholders to be denied pre-emption rights in the subscription of new shares or the taking up of new quotas in a situation of actual or imminent insolvency, in particular where the plan provides for a reduction of share capital to zero or below the statutory minimum together with a simultaneous capital increase. The consolidated text takes up that possibility in article 631, paragraph 4, depriving shareholders of pre-emption rights in those cases. In addition, Law 16/2022 has made it possible to cram down shareholders in non-consensual plans, confirming plans that affect their rights even where the general meeting has voted against, provided that the conditions as to creditor protection and the viability of the business are met.
Practice has already produced paradigm cases of cram-down of shareholders. The well-known CELSA matter, decided by the Barcelona commercial court —the Spanish “Juzgado de lo Mercantil”— and upheld by the provincial appeal court, was the first case in which control of a large industrial company was shifted from its shareholders to its creditors by means of a court-confirmed restructuring plan involving a cram-down of shareholders. Academic commentators have pointed out that this case illustrates both the potential of the new regime for resolving situations of over-indebtedness involving viable businesses and the practical and registration difficulties of carrying through a cram-down of shareholders without their cooperation, which has led to advice that consensual restructurings should be given priority wherever possible.
6.Cram-down and the comparison with the insolvency alternative
Cram-down cannot be analysed in isolation from the insolvency alternative. Directive 2019/1023 requires that, in confirming plans that affect dissenting creditors, the best-interest-of-creditors test be applied, comparing the position the plan gives them with the position they would be in on a liquidation of the business or on the application of the best alternative solution in the absence of a plan. The consolidated text takes up this logic in the rules on confirmation and challenge, requiring the judge to verify that the plan offers a reasonable prospect of avoiding insolvency proceedings and of securing the viability of the business in the short and medium term, and that dissenting creditors are left no worse off than under the insolvency alternative.
The going-concern valuation of the business and the comparison with the liquidation scenario are therefore essential elements in legitimising cram-down. The point is not that a majority may impose any solution it wishes, but that it may impose a solution which, although it involves sacrifices, is better for all concerned than the alternative of insolvency proceedings and liquidation. The case law that builds up on the application of the best-interest-of-creditors test and on the absolute or relative priority rule will be decisive in setting the limits of the room for manoeuvre available to majorities and of the protection afforded to minorities.
7.Conclusion: a power to impose, conditioned by technique and safeguards
The possibility of imposing a restructuring on a party that votes against it, whether creditor or shareholder, is one of the hallmarks of the new restructuring regime, but it is not a discretionary power. It is conditioned by correct class formation under articles 622 to 624 bis of the consolidated text, by obtaining qualified majorities within each class under article 629, by the going-concern valuation of the business and the identification of “in the money” classes, by compliance with the best-interest-of-creditors test and with the priority rule, and by the intervention of the court in confirming the plan and in deciding challenges under articles 635 and 654 to 655. Court practice, as the decisions on Xeldist, Real Murcia and CELSA show, is beginning to trace the outlines of this power to impose, penalising defective class structures, disproportionately unfavourable treatment of particular classes and abusive uses of cram-down.
For practitioners, the lesson is twofold. On the one hand, cram-down is a powerful tool for overcoming deadlock and resolving crisis situations involving viable businesses, but it calls for exacting technical rigour in class formation, in valuation and in the design of the plan. On the other, dissenting creditors and shareholders are not left unprotected: they have substantive and procedural safeguards allowing them to challenge plans that unjustifiably prejudice them or that have been built on manipulated class structures. In an insolvency law increasingly oriented towards restructuring and increasingly aligned with European standards, the cram-down of creditors and shareholders is, ultimately, a mechanism for redistributing power that can only operate legitimately if it rests on a sound legal architecture.
