Set-off and insolvency in the context of intermediated debt securities: The Spanish approach

Abstract

This is the second in a series of articles considering the legal position regarding insolvency set-off in the context of intermediated debt securities in a number of jurisdictions. The position under English law was set out by Professor Louise Gullifer QC (Hon) in “Insolvency set-off in the context of Intermediated debt securities” published in the May 2019 edition, (2019) 5 JIBFL 287. The article explores whether, under Spanish Law, an investor in intermediated listed debt securities can invoke a right of set-off, arising from a counterclaim he holds against the insolvent issuer. When an investor has securities recorded in his own name in the registry accounts, he will be entitled to ask for payment from the issuer and, therefore, to invoke set-off when the relevant conditions are met. In contrast, when the intermediary has the securities recorded in the registry accounts in his own name, only he will be entitled to obtain payment. Thus, it is necessary under Spanish law to devise a solution to permit the investor to assert set-off against the insolvent issuer through the intermediar