Royal Decree Act 4/2014 concerning the improvement of the legal framework of corporate refinancing and debt restructuring agreements

The Cabinet has approved a Royal Decree Act (Order in Council) establishing urgent measures to expedite and streamline corporate refinancing and debt restructuring processes. In essence, these measures aim at ensuring the survival of companies that, notwithstanding the accumulation of excessive financial burden, are viable from an operational point of view through an orderly and balanced system of agreements with creditors and a wider range of refinancing options.The Royal Decree Act amends some aspects of the Spanish Insolvencies Act of 9 July 2003 regarding the pre-insolvency proceedings stage so as to avert entry into said proceedings and subsequent company liquidation. Specifically, the Royal Decree Act amends the regime of homologated (court sanctioned) refinancing agreements, which may include, aside from deferrals, the forgiveness and capitalisation of debt. These homologated refinancing agreements may extend their effects to dissenting creditors where the majority requirement established in each case is met. In addition, issues such as «fresh money» are addressed…