Revisiting Improper Class Formation as a Primary Ground for Declaring the Total Ineffectiveness of a Restructuring Plan: Commentary on the Judgment of the Valladolid Court of Appeal of 11 February 2026

Background of the Case

We have recently received the Judgment of the Valladolid Court of Appeal of 11 February 2026, which upheld our challenge and declared the ineffectiveness of a restructuring plan. The case raised three key issues, frequently invoked in challenges to restructuring plans: (i) fraud of law, given that the plan was heavily focused on resolving a dispute with a minority shareholder; (ii) defective determination of the perimeter of affected claims; and (iii) improper class formation, in this case due to the inclusion within a single class of debts with different insolvency rankings.

The plan stemmed from prior disputes between the majority shareholder, who controlled the company’s management, and the minority shareholder, who had also acted as a financier and held a claim arising from commercial agreements.

The structure of the plan comprised five classes of creditors, one of which was created on a purely subjective basis specifically for the minority shareholder/creditor, who was the sole challenging party.

The Judgment Focuses on Three Issues

Fraud of Law

The challenging party argued that the company had acted in bad faith and with fraudulent intent, using the restructuring framework to resolve a corporate dispute and to circumvent pending judicial decisions. Although the Court acknowledges the applicability of fraud of law in the context of restructuring plans, in line with the doctrine established in the ALDESA case (Madrid Court of Appeal, Section 28, Judgment 328/2024), it limits its impact and dismisses this ground. The decision is based primarily on the fact that the claimant failed to assert its rights through corporate law channels, as it did not challenge the corporate resolution preparatory to the plan. Consequently, the Court considers the corporate process (iter societatis) to be lawful and excludes the existence of fraud.

Defective Determination of the Perimeter

In this respect, it was argued that the exclusion of certain creditors and claims from the affected perimeter was arbitrary and insufficiently justified. It was allegedly carried out solely to define the liabilities and structure the classes in a manner that would ensure plan approval. Following an extensive doctrinal and case law analysis on judicial control of the perimeter, the Court concludes that, although the proponent enjoys discretion, it is under an obligation to provide reasoning and justification. Nevertheless, the Court adopts a broad approach to the freedom of determining the perimeter and refers its control to the rules governing class formation.

Ground Upheld: Improper Class Formation

The decisive issue leading to the declaration of ineffectiveness of the plan lies in the defective formation of classes, specifically in the creation of a single (subjective) class for the minority creditor, which included both a commercial claim and a loan-derived claim.

The company’s interest in grouping both claims is evident, as separating them into two classes would have granted the dissenting shareholder a double majority voting position, potentially preventing the plan from being approved.

The Court’s analysis begins with the differing legal nature of the two types of debt and their distinct classification for insolvency purposes. Under the general insolvency rule, claims held by persons especially related to the debtor are subordinated. However, a specific exception applies: claims held by shareholders with a significant shareholding are not subordinated unless they arise from loans or transactions with a similar economic purpose.

Accordingly, while there is no doubt that the loan claim is subordinated, the key issue is whether the commercial claim—arising from invoices issued in the course of commercial dealings—should also be considered subordinated or, conversely, falls outside such classification as it does not derive from loans or analogous transactions.

Following Supreme Court case law (Judgments of 1 March 2019 and 22 June 2021), the Court examines that claims arising from loans or analogous transactions may include those aimed at financing the debtor, either by virtue of the legal nature of the transaction or its economic purpose.

However, in the present case, the creditor acted as a supplier, maintaining a commercial relationship with the parent company that generated the disputed invoices, without providing financing through such transactions. Therefore, the commercial claim must be classified as an ordinary claim.

Consequently, improper class formation occurred by including within the same class two claims with different insolvency rankings: the loan claim, of a subordinated nature, and the commercial claim, of an ordinary nature. As no common interest existed between them—particularly where the grouping criterion was precisely their insolvency ranking—the class formation was defective..

Final Assessment

This judgment constitutes a significant contribution to Spanish case law on restructuring plans, with important implications for legal practice. Regardless of whether one agrees with the restrictive approach to fraud of law or the broad discretion in defining the perimeter, the ruling is thoroughly reasoned and consistent with the line increasingly adopted by various Courts of Appeal.

Two lessons can be drawn. First, although it is widely acknowledged that some plans may involve fraud of law—where the company’s true intention is not to restructure for survival but to use the flexibility of this pre-insolvency mechanism to impose haircuts or deferrals on dissenting creditors—the likelihood of success of challenges on this ground remains limited and is subject to restrictive judicial interpretation. Second, the discretion afforded in determining the affected perimeter also makes challenges on this basis difficult, unless the issue can be reframed as one of class formation.

Contrary to the above, the requirement of proper class formation has become one of the most effective avenues for creditors to challenge restructuring plans. In this regard, the judgment analysed provides an important contribution by emphasising the need for homogeneity in the insolvency classification of claims where class formation is based on clearly subjective criteria—a situation that frequently arises in the context of shareholder disputes such as the one examined in this case.

Article jointly prepared by Fernando Gutiérrez Fernández, partner and head of the Litigation and Arbitration Department, and Paula Ramírez Linares, lawyer in the litigation practice at Ayuela Jiménez.