Restructuring and Insolvency
At Garrigues, we advise multinational groups and companies in distress to enable them to adopt the decisions best suited to restructuring their business from an operational or financial standpoint. Our advisory services take in everything from labor and employment law aspects to insolvency, financial and tax-related matters. Our extensive experience of restructuring multinational groups and companies ensures that adjustment plans are tailored to the needs of the business and the market situation.
We also advise financial institutions on protecting their claims and collateral packages in pre-insolvency and insolvency situations, actively assisting with debt recovery and periodically monitoring any incidents that may have a bearing on the debt and collateral of banks, savings banks or financial credit institutions.
We provide recurring advice to the principal investment funds and special situations funds with interests in Spain, assisting them in the approach to the transaction, the understanding of the main problems and the design of the optimal strategies to mitigate disputes or investment losses. We cover the whole spectrum of investors (institutions, investment funds, special situations funds, distress funds and hedge funds) and all types of transactions, whether involving the acquisition of companies, production units, individual assets and debt packages, as well as direct lending to groups or enterprises, recommending the best strategies with a view to the return on investment.
Garrigues’ extensive office network enables our restructuring experts to be on hand near our clients and allows us to speak on their behalf directly with the financial or court authorities and with the other local players affected by and involved in business distress situations. The international reputation of our experts is another of our major assets. We form part of prestigious groups and associations of worldwide restructuring experts, sponsoring global best practices and contributing to the ongoing training of our lawyers in innovative tools for restructuring and overcoming financial difficulties.
2014 saw wholesale reform of insolvency legislation, monitored closely by Garrigues, in order to facilitate the rapid restructuring of sustainable corporate debt. We regularly take part in numerous events to discuss the scope of the new legislation and have keep our clients abreast of the latest developments. Carrying on with this awareness-raising work and keeping one step ahead of any potential future changes and difficulties is one of the Restructuring and Insolvency Department’s daily challenges.
Our work is constantly singled out for praise by renowned specialist publications. The Restructuring and Insolvency Department takes top spot in various international legal directories, which spotlighting the finest business crisis management experts.
Business restructuring processes
We counsel advice to both financial institutions and borrowers on bilateral and syndicated corporate lending transactions; leverage finance and asset finance; on debt restructuring in the secondary loans market; on the acquisition of non-performing loans, the grant of credit to companies in special situations (direct lending, fresh money) and the acquisition of debt packages (distressed and below par debt). We also advise on structured finance and on the treatment of derivatives in pre-insolvency and insolvency situations.
On the debtor side, we identify the optimal type of refinancing (syndicated; bilateral; with an independent expert; with or without court approval), analyzing the classes of debt affected and defining the goals of the process, catering to the motivations of the key players (financial institutions, funds, investors, companies, suppliers, workers, the public authorities, etc.). When advising companies on refinancing, our team of experts acts in the negotiation of standstill agreements, the search for new financing, and asset sell-offs and debt-to-equity swaps.
When advising investors, funds or financial institutions, we analyze the type of proposed refinancing, scrutinizing the security package and examining the viability plan and debt repayment schedule. We also design stress tests for security in the event of insolvency, suggest and recommend other alternatives, and take part in the negotiation of standstill and intercreditor agreements, including applications for court approval of the agreement reached by the majority of the financial institutions, which may include the mandatory extension of the effects of the agreement to dissenting creditors (Spanish scheme of arrangements) or the defense of dissenting creditors against a mandatory extension of effects that entails a disproportionate sacrifice of their position.
Acquisition of companies, assets and debt from distressed companies
We advise the major funds on their operations in Spain for the acquisition of companies, production units, individual assets and debt packages.
Our restructuring and insolvency professionals conducts legal due diligence reviews in transactions for the sale or purchase of non-performing loans, providing advice throughout the entire process, including the drafting of confidentiality agreements, the formalization of offers, the drafting of sale/purchase agreements, the drafting of the contract with the servicer, requests for rulings from the antitrust authorities where the transaction entails any kind of concentration, etc.
Our experts also design loan-to-own strategies, mitigating the legal risks of acquisitions and speeding up implementation times.
Pre-insolvency situations and insolvency proceedings
From a debtor perspective, we propose bespoke solutions help them withstand the crisis and expedite the decision-making process. Making use of out-of-court procedures and court proceedings (such as pre-insolvency procedures and formal insolvency proceedings), we take charge of implementing restructuring plans and advising on the sell-off of assets, production lines or production units, seeking to strike a balance among all the parties concerned (purchaser, seller, workers, insolvency managers, etc.)
On the creditor side, our team of experts designs the most efficient debt collection and recovery strategies. We advise on and take charge of enforcing security interests or financial collateral, including enforcement against shares and other equity interests. We negotiate with insolvency managers to maximize debt recovery, advising on the acquisition of assets from businesses in insolvency or pre-insolvency situations.
For debtors, we design swift, competitively priced strategies to maximize cash inflows by implementing supplier payment plans, individual or collective agreements, or bringing claims in or out of court.
For creditors, our experts analyze the debtor’s solvency position in order to assess how far its debts are recoverable directly or indirectly (lifting of the corporate veil), making it possible to obtain a return equal or close to the nominal value of the claim.
Liability of directors, board members and executives
Our restructuring and insolvency experts analyze the potential types of liability (commercial, tax, labor/employment and criminal) of directors, executives and attorneys-in-fact of companies that are insolvent or on the verge of insolvency and, particularly, any liability that may flow from the insolvency proceedings itself. We have extensive expertise in insolvency proceedings, having successfully defended the liability of directors and executives of insolvent companies and, in particular, groups and multinational companies in the event of the insolvency of their Spanish subsidiaries. Our advice is rounded out with an analysis of the liability insurance policies (D&O policies), negotiating with the insurer the coverage and the legal defense with the insurer and, in the most complex cases, bringing action to seek both coverage and costs via court or arbitration proceedings.