Restructuring and Insolvency

We advise both financial institutions and borrowers on bilateral and syndicated corporate lending transactions; leverage 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, Garrigues can assist in determining the optimal type of refinancing (syndicated; bilateral; with an independent expert; with or without court approval), analyze the classes of debt affected and define 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 can act in the negotiation of standstill agreements, the search for new financing, asset sell-offs and debt-to-equity swaps.

When advising investors, funds or financial institutions, our team can analyze the type of proposed refinancing and scrutinize the collateral package. We can also prepare stress tests for security in the event of insolvency and suggest other alternatives, as well as 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 schemes of arrangement) or the defense of dissenting creditors against a mandatory extension of effects that entails a disproportionate sacrifice of their position or an absence of the required majorities.

We advise the major funds on their operations in Spain for the acquisition of companies, production units, individual assets and debt packages, mitigating the legal risks of acquisitions and reducing implementation times.

Our restructuring and insolvency professionals conduct legal due diligence reviews as part of major transactions for the sale or purchase of non-performing loan portfolios, and can advise 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. Following acquisition of the portfolio, we actively participate in workout arrangements for the most complex positions, suggesting and implementing legal strategies to minimize cost and resolve uncertainty.

From a debtor perspective, we propose bespoke solutions to help them withstand the crisis and expedite the decision-making process. Using 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.). Our broad expertise in insolvency matters (and insolvency litigation) and the participation of our team in the major domestic insolvency proceedings are a guarantee of the best client service. Our team notably has experience in the conduct of ancillary insolvency proceedings and related lawsuits (advising both debtors and creditors), offering the most sophisticated technical and legal solutions.

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 assist in executing 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, making it possible to obtain a return equal or close to the nominal value of the claim.

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.

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 the coverage and the legal defense costs with the insurer and, in the most complex cases, bringing action to seek both coverage and costs via court or arbitration proceedings.