It even considers contractual clauses which enable one party to terminate the contractual relationship in the event of the insolvency of the other party null, and thus void. Accordingly, the parties to a contract must continue to fulfil their contractual obligations despite the insolvency of one of the parties, with a particular characteristic: contractual claims that arise after the initiation of insolvency proceedings are considered “claims against the insolvency estate” (créditos contra la masa) and as such are treated as privileged claims.
Distribution agreements, or more precisely, commercial agency agreements, however, are subject to a special regulation of the Insolvency Law. It establishes the non-application of the general prohibition of contract termination in cases where unilateral termination of the contract – even in case of insolvency – is expressly permitted by law.
Article 26.1b) of the Spanish Agency Contract Law (Ley sobre Contrato de Agencia, LCA) stipulates, that “the contractual relationship may be terminated by either party to the agency contract at any time without notice, irrespective of whether it was concluded for a fixed or indefinite term, if insolvency proceedings have been initiated regarding the other party’s assets.” Consequently, contrary to the general rule foreseen by insolvency law, in the event of insolvency, an agency contract can be terminated without notice. The contract ends the moment the other party receives the formal letter of termination. Hence, any corresponding contractual clause allowing for the termination in case of insolvency must be considered valid and effective. The (justified) termination of an agency contract by the company due to the insolvency of the commercial agent does not necessarily imply, however, that the latter automatically loses their right to receive compensation for the customers they acquired. Such a right to indemnity might exist, under certain circumstances, despite de termination due to insolvency, as Spanish courts have found in the past.
There is no consensus on the question whether this exception also applies, by analogy, to other types of distribution or franchise agreements, not regulated separately in a special law. The majority of experts rejects such application by analogy as no exception in this regard has been established by law. In other words, a contractual clause in a distribution or franchise agreement that provides for the termination of the agreement in case of insolvency of one of the contracting parties must be considered null and void, in accordance with the general rule of Spanish insolvency law.