|Ignacio Buil Aldana||José Luis Lucena Rebollo|
In practice, clawback risk contributes to an atmosphere of legal uncertainty for creditors involved in transactions with distressed companies. These transactions typically include refinancing agreements, the granting of fresh money, amendments to the security interest, and even assignments of debt positions.
However, the Spanish Insolvency Act gives creditors tools that aim to limit the effects of a possible clawback action: (i) statutory refinancing agreements (collective and, since the reform, individual); and, (ii) the Spanish Scheme (homologación judicial). While approval of 51% of the financial debt is sufficient for a Spanish Scheme to completely protect creditors from clawback, statutory refinancing agreements not only require approval of 60% of the debtor's total liabilities, but may still be challenged by the trustee, based exclusively on a breach of the statutory requirements for this type of agreement.
The reform of the Spanish Insolvency Act in March 2014 introduced several amendments to these tools, creating individual statutory refinancing agreements for which the approval of other creditors is not required to protect such agreement from clawback. Regarding collective statutory refinancing agreements, the prerequisite of a favourable opinion issued by an independent expert has been replaced by an auditor's certificate stating that the statutory requirements have been met.
In short, in the past, clawback has often discouraged creditors from entering into transactions with distressed companies in Spain. However, the law, in its present form, gives creditors sufficient tools to mitigate their exposure to clawback, to ensure that transactions are ring-fenced from what were once risks beyond their control.
Ignacio Buil Aldana and José Luis Lucena Rebollo