BROSETA analyzes the evolution of refinancing and approval agreements

BROSETA held the conference “Refinancing and approval agreements: evolution and balance two years since the reform of 2014”, a session organized by the Department of Banking and Finance, dedicated to analyzing the reforms introduced by the publication of Royal Decree Law 4/2014, of 7 March, which introduced urgent measures to be taken on refinancing and restructuring of corporate debt.

This session extensively reviewed the reforms, which radically changed the rules of the game in the field of refinancing operations as instruments to ensure the survival of companies that have accumulated excessive financial burdens but are viable from the point of view of operating through an orderly and balanced system of agreements with creditors, and a wide range of refinancing formulas.

The meeting brought together nearly a hundred professionals interested in taking stock of the reforms and reviewing how the various actors involved in this sector (financial institutions, financial advisors, lawyers and judges, mainly) have been shaping and defining the issues and main elements of that regulation.

Thus, the conference analysed doubts about the practical implementation of the reform and its complexity, as well as some of the instruments that have been a success in terms of practical application. This is the case with judicial approval and inviolability of refinancing agreements.

Antonio J. Navarro, Partner and Head of the BROSETA Banking and Finance Department,  conducted a review of the key aspects of the 2014 reform with a speech on the major developments of Royal Decree Law 4/2014 and the impact of the new regulations on refinancing agreements. During his speech he addressed concepts like the privilege of fresh money or debt capitalization.

Miguel Navarro and Carlos Ochoa, lawyers in the Banking and Finance Department of BROSETA, focused their speeches on the conflicting aspects of judicial approval, a successful concept in practice with two different effects, such as the absolute protection of the refinancing agreement effects against actions for rescission; and the possibility of extending certain effects to uncooperative creditors.

Regarding the particularities of judicial approval they highlighted the extent of its use, judicial discretion, or the concept of “financial liabilities”, among other things. They also reviewed, the catalogue of expandable effects via approval, such as compulsory early repayment, the cancellation of guarantees, collateral lines extension, the Covenants of stand-still, or the ban on starting singular executions by uncooperative creditors.