From 2012 until 2014, the Spanish Ministry of the Economy
set out a plan to pay suppliers any unsettled invoices from the
municipalities and the regions. The aim was to reactivate the
Spanish economy, maintain the good order of public services,
and avoid the affected companies encountering financial
difficulties. The payment amounted to almost €41 billion
(approximately $47 billion), dealt with more than €8
million of unpaid invoices and benefited more than 190,000
suppliers. However, this payment was conditional, among other
things, on the suppliers renouncing the right to any interest
on the default, to which they were legally entitled.
Although the plan was successful, many suppliers initiated
civil proceedings against the Spanish administration, claiming
that being made to renounce the right to their default interest
contravened Directive 7/2011/UE of February 16, on measures
against payment delinquency. The Spanish courts raised a
prejudicial issue at EU level and the dispute has been before
the EU Supreme Court of Justice, which, at the time of writing,
was due to deliver a judgment shortly. In case the Supreme
Court declares that the non-payment of default interest under
these suppliers' payment plans was abusive and illegal, Spanish
courts will have to conclude that the framework is against the
EU regulation and will apply the EU rules rather than the local
regulation. This will allow all affected suppliers to start
proceedings against the Spanish administration to claim for the
reimbursement of the default interest.
Eventually if this outcome is finally confirmed, the Spanish
government will return almost €3 billion to these
suppliers, since default interest is calculated at
approximately eight percent for an average period of more than
320 days. As a result, these suppliers will be entitled to
claim for this interest from the Spanish administration in a
similar way as the recent reimbursement of the percent of euro
which levied every litre of petrol purchased by any entity or
consumer. (This tax was originally created to support
This situation may open up an attractive and
straight-forward finance opportunity for the suppliers.
Investors will be interested in acquiring the credit rights
against the Spanish administration deriving from the claims.
Suppliers can therefore monetise their credit rights for a
reasonable discount. Investors can also efficiently structure
their own funding through securitisation and issuing bonds.
The key suppliers with large amounts of interest to be
reimbursed are the construction companies which worked for
public administrations, concessionaires and service suppliers.
It is therefore time to dust off old invoices against the
public administration and cash in any credit rights deriving
from this default interest. Suppliers are advised not to wait
until the EU judgment is confirmed to raise a claim: the
statute of limitations sets up a four-year prescription period.
It is already counting down for 2012.
Iñigo de Luisa