Amendment of the Spanish Insolvency Regulations and their Implication in Spanish Restructuring/Distressed Deals

With the aim of preserving the business activities of companies in distress, to induce capital investment in distressed companies and to facilitate pre-insolvency restructurings, a substantial reform of the Insolvency Act has been approved on 4 October, 2011 (the «Reform»). The Reform introduces concepts which have been unknown to the Spanish market such as pre-insolvency cram-down mechanisms or dip financings and allows for certain purchasers of debt of insolvent companies to keep their right to vote in a composition of creditors. We have tried to list those issues within the Reform which we think directly affect restructuring/distressed deals, rather than citing all proposals made within the Reform.