The Council of Ministers has approved the Royal Decree Law (RDL) by which Urgent Measures are adopted in the matter of Refinancing and Restructuring of Corporate Debt whose objective is to streamline and make these processes more flexible. It is about guaranteeing the survival of companies that have accumulated an excessive financial burden but that are viable from an operational point of view, through an orderly and balanced system of agreements with creditors and a wider range of refinancing formulas. The text must be subsequently validated by the Congress of Deputies.

The RDL modifies some specific aspects of the Bankruptcy Law (22/2033 of July 9) in relation to the pre-bankruptcy phase, so as to avoid entering into bankruptcy and the subsequent liquidation of these companies. Specifically, the regime of judicially approved refinancing agreements is modified, which may include deductions and capitalization of the debt, as well as deferrals (waiting in bankruptcy jargon). These judicially approved refinancing agreements may extend their effects to dissident creditors when the majorities established in each case concur. Aspects such as the so-called fresh money.

Individual refinancing agreements

The RDL introduces the possibility of reaching refinancing agreements with one or more creditors, provided that they improve the debtor's equity position and without the need to have majorities of liabilities. These agreements are only terminable by the judge at the request of the bankruptcy administration, if he understands that the requirements set out do not meet.

Collective refinancing agreements not legally approved

These agreements are simplified by removing the requirement for the independent expert report. It is replaced by the auditor's certification accrediting the attendance of the required majority of liabilities. In order to guarantee legal certainty, these agreements may no longer be subject to subsequent termination (unless they fail to meet the established requirements), if the company enters bankruptcy. With this, the current situation is corrected, where the agreements are usually terminated because they are considered detrimental to the active mass of the competition.

Finally, in the event that the collective agreement proposes a capitalization of credits, and to enhance this figure, the presumption of guilt of the bankruptcy is established if the debtor had refused to do so without reasonable cause. To this end, it will be understood that there is reasonable cause if it is so declared by means of a report issued by an independent expert, and it is also necessary that the proposed agreement recognize in favor of the debtor's partners a preferential acquisition right over the shares subscribed by the creditors, to as a result of capitalization, in the event of their subsequent disposal.

Collective refinancing agreements legally approved

In order to facilitate speed and flexibility in these agreements, the judge will only have to verify the concurrence of the required majorities and the formal requirements to agree on their approval. The agreements, once judicially approved, may not be subject to later termination if the company enters into bankruptcy.

As in non-approved collective agreements, the requirement of the independent expert report is eliminated. It is also replaced by the auditor's certification accrediting the concurrence of the required majority of liabilities.

The majority required to legally approve the agreement goes from 55% to 51% (simple majority). This majority is not computed, as until now, with respect to the liabilities owned by financial entities, but with respect to all creditors of financial liabilities. Holders of any financial indebtedness (consequently excluding creditors for commercial operations and creditors of public law liabilities) are understood as such, regardless of whether or not they are subject to supervision. financial. However, the possibility is contemplated that other creditors, other than financial liabilities or public law, may adhere to the agreement. Also as a novelty, in syndicated loans, it is understood that the lending creditors sign the refinancing agreement when they vote in favor of 75% of the liability represented by the loan, unless the rules that regulate syndication establish a lower majority.

If 60% of the financial liability creditors have agreed to waits (deferrals) of up to five years and the conversion of credits into participative loans for the same term, these measures will be extended to dissident creditors without collateral. If the agreement has been signed by 75% of the creditors of financial liabilities, they will be extended to dissident creditors: waits of between 5 and 10 years, withdrawals, conversion of credits into shares or participations of the debtor, or participative credits, transformation of debt in any other financial instrument of different characteristics and assignments of assets in payment of debts.

Currently, approved refinancing agreements do not extend their effects to loans with real collateral (mortgages, clothing, etc.). With the reform, these credits are also affected by the approved agreement, as follows:

In the part of the credit that exceeds the value of the guarantee: The effects of the agreement provided for in the previous point are extended (waiting, conversion of credits, etc.), in the same terms as for loans without collateral, and with the same majorities.

Up to the value of the guarantee: The effects of the agreement provided for in the previous point are extended, when so agreed by the same majorities of 65% and 80%, computed based on the value of the guarantees of the accepting creditors.

On the other hand, the possibility is recognized that the approved refinancing agreements include (and extend to dissidents) the conversion of debt into equity. The agreement of the shareholders' meeting required in this regard is a simple majority, and an alternative is offered to remove the dissident creditor, who will be left to their choice.

Likewise, and as in non-approved agreements, the presumption of guilt of the bankruptcy is established if the debtor had refused to capitalization without reasonable cause.

Common measures to homologated and non-homologated collective agreements

It is foreseen the paralysis of the singular executions of goods necessary for the continuity of the professional or business activity, from the moment in which the beginning of the negotiations with the creditors is communicated to the court. The stoppage would occur for a maximum period of 4 months from the debtor's communication. The objective is to allow the negotiations of the agreements to come to fruition and to avoid an accumulation of singular executions by creditors not willing to negotiate.

Measures common to individual and collective agreements approved and not approved

Currently only 50% of the new money put into a refinance has that insolvency privilege, which implies that the credits are paid on their respective maturity. This percentage is temporarily raised to 100% in order to provide this liquidity with maximum bankruptcy protection. The objective is to encourage additional financing as it is essential to guarantee the transitory viability of the company and to make the refinancing agreement itself practicable.

This consideration extends to the income made by the debtor himself or specially related persons, excluding capital increase operations.

This measure is adopted on an extraordinary and temporary basis for the income of new money that occurs within two years from the entry into force of the royal decree-law.

Improvement in the treatment of provisions made by financial entities

The Bank of Spain is entrusted to establish homogeneous rules to improve the rating of the remaining debt after a refinancing agreement.

Final provisions

The Civil Procedure Law is modified, to make effective the stoppage of singular executions during the negotiations of the refinancing agreement.

-Real Decree-Law 10/2008, of December 12, is amended so that, during the fiscal years ending in 2014, impairment losses, recognized in the companies' annual accounts, derived from property, plant and equipment, are not computed , real estate investments, stocks or loans or receivables, for the sole purpose that it is not a cause of insolvency (and bankruptcy) or of reduction of capital or dissolution of the company.

-Real Decree 1066/2007, of the OPA regime, is modified. In this way, the public tender offer and the need to request, where appropriate, a waiver from the CNMV are excepted, in the case of certain operations carried out as a direct consequence of a judicially approved refinancing agreement, provided that it has been favorably informed by an independent expert.

-Modification of the consolidated text of the Corporation Tax Law, approved by Royal Legislative Decree 4/2004, of March 5. In the field of Corporation Tax, the absence of taxation is established in the cases of capitalization of debts, unless it had been the subject of a derivative acquisition by the creditor for a value different from its nominal value. Likewise, in relation to the tax treatment of the income derived from deductions and waits derived from the application of the Bankruptcy Law, a deferred imputation system of the income generated in the tax base is determined, based on the financial expenses that are subsequently transferred. registering.

-Modification of the consolidated text of the Law on Tax on Patrimonial Transmissions and Documented Legal Acts, approved by Royal Legislative Decree 1/1993, of September 24. In order to collaborate in the maintenance of viable companies, the exemption in the Tax on Patrimonial Transmissions and Documented Legal Acts is expanded to the deeds that contain deductions or reductions of the loans, credits and other obligations, facilitating the refinancing or payment agreements.

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