Unapproved Refinancing Agreements in Spain

Among those agreements, some do not have judicial validity:

• These agreements simplify by eliminating the requirement of a report from an independent expert that the Company Registry appoints.  Both the debtor and creditors can inquire with the Company Registry located in the debtor’s domicile about the designation of an independent expert to give information on the viability plan, the proportionality of guarantees, or any other circumstance that could be relevant
• To guarantee legal certainty, these agreements cannot be the object of future termination (unless they do not comply with the required conditions) if the company enters a contract with the creditors.  This readdresses the current situation where the agreements usually terminate for being prejudicial for the assets of the insolvency’s estate
• In the case of capitalization of credits in the collective agreement, and to enhance this idea, the presumption of creditors’ guilt is established if the debtor refused it without reasonable cause.  To this effect, there exists a reasonable cause if established in a report of the independent expert.  It will be necessary that the proposed agreement recognizes to the debtor’s partners a preemptive right to acquire the shares subscribed by the creditors as a result of the capitalization in case of a future alienation of those shares.  The partners who have refused the capitalization or the issue of convertible instruments and the debtor’s representatives that hampered it may be participants

The new regime will apply to the collective refinancing processes that opened before the effective date of the Real Decree-Law 4/2014 (March 9, 2014) in which the designation of an independent expert has not yet been requested of the Company Registry.  Otherwise, the previous regime will apply unless the parties explicitly choose the new regime in the refinancing agreement.

For additional information regarding refinancing agreements in Spain,