INTELLIGENCE TOOL

Debt Restructuring

Legal and financial solutions for companies in difficulty — refinancing, restructuring plans and business continuity.

Turn a debt crisis into a continuity plan.

When cash-flow pressure mounts, every day counts. We design the restructuring of your liabilities, inside or outside insolvency proceedings, to protect the company viability and its creditors interests.

This tool is free to use. If you are looking for advice on restructuring, please see our debt restructuring section.

Debt Restructuring Simulator

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Refinancing and standstill

Negotiation with financial institutions, standstill agreements and rescheduling of the payment calendar.

Restructuring plans

Design and court approval of restructuring plans under the new pre-insolvency framework of the Spanish Insolvency Act.

Viability analysis

Financial and legal diagnosis, cash-flow scenarios and insolvency threshold in real time.

Director protection

Shielding of the management body, prevention of liability and orderly management of liabilities.

The Debt Restructuring Approval Simulator walks users through the judicial approval of a restructuring plan under the TRLC in five stages. It simulates a complete case: a company with liabilities of 9,200,000 euros across four categories of creditors and a plan involving debt write-offs, a repayment deferral, capitalisation and new capital. At each stage, it shows what happens to the company, the position of the parties and the exact applicable articles. It is free to use and available in Spanish, English and Chinese.

Understand the result

What does the result mean?

The simulator does not return a figure; it returns the procedure in three dimensions.

Feasibility

When does the scheme apply?

From the likelihood of insolvency to actual insolvency, Article 636 of the TRLC.

Majorities

What support does each class need?

Two-thirds of the total amount of the liabilities of that class; three-quarters if the claims are secured by a security interest.

Type-approval

What does the judge’s ruling add?

Extension of measures to dissidents, termination of contracts and protection of the new currency.

The restructuring plan has been the central instrument of the Spanish pre-insolvency procedure since Law 16/2022 reformed the TRLC, which was approved by Royal Legislative Decree 1/2020, transposing Directive (EU) 2019/1023. It allows for the modification of the assets, liabilities or equity of a debtor facing probable insolvency, imminent insolvency or current insolvency. The claims concerned are grouped into classes according to common interest, whilst those of different ranks, those secured by collateral and public claims form separate classes.

Each class approves the plan with more than two-thirds of the value of its liabilities; three-quarters if there is a security interest. If all classes approve, the court’s confirmation extends the effects to dissenting members of each class. If any class votes against the plan, cross-class extension applies where a simple majority of classes – including a preferential class, or a class that would reasonably be expected to have received some payment based on the going concern valuation of the company – approves the plan. In such a case, the appointment of a restructuring expert is mandatory.

This overview is for information purposes only; it is not a legal opinion. Professional analysis is required when certain classes of creditors announce that they will vote against the plan or challenge it, when the plan affects public credit or the partners, and when the conflict between the ‘best interests of creditors’ test and the rule of absolute priority may determine whether the plan is approved.

What are the stages involved in the court approval of a restructuring plan?

The procedure begins before the case reaches court. The notice of the commencement of negotiations under Articles 585 et seq. of the TRLC allows enforcement proceedings against assets necessary for the business to be suspended. This is followed by the application for approval under Article 644, together with the plan and the required certifications; once this application is accepted for processing, it prevents further enforcement proceedings against those assets and is published in the Public Insolvency Register.

The judge then issues the order of confirmation, which sets out the effects of the plan on dissenting creditors, contracts and new financing. Those affected may challenge it, although such a challenge does not generally suspend the implementation of the plan. The law also provides for a procedure involving prior cross-examination, with objections being discussed before the judge makes a ruling.

The simulator demonstrates the procedure, but it does not negotiate with your creditors or structure your liabilities. If your company is facing a real-life refinancing, drawing up the plan and defending it require professional judgement. For this, please see our debt restructuring section.

Methodology and sources

What they rely on

The simulator is based on Book II of the Consolidated Text of the Insolvency Act, approved by Royal Legislative Decree 1/2020 and amended by Act 16/2022, which transposed Directive (EU) 2019/1023. It provides a step-by-step commentary on Articles 583 to 664 of the Consolidated Text of the Insolvency Act (TRLC) applicable to the case, from the notification of negotiations to the challenge of the order. It is an educational tool and its content does not constitute legal advice.

Consolidated Text of the Insolvency Act (Royal Decree-Law 1/2020) — Official State Gazette (BOE)↗ Law 16/2022, amending the TRLC — Official State Gazette (BOE)↗ Directive (EU) 2019/1023 on preventive restructuring frameworks — EUR-Lex↗ Public Insolvency Register↗

Frequently asked questions

What people ask on debt restructuring

What is a restructuring plan?

It is the arrangement set out in Book II of the TRLC which alters the debtor’s assets, liabilities or equity in order to resolve insolvency. It combines debt write-offs, payment deferrals, capitalisation, contract termination and new financing.

How are classes of creditors formed?

The claims concerned are grouped on the basis of common interest, using objective criteria. Those of different ranks are placed in different classes; those secured by a charge form their own class; and the public claim concerned constitutes a separate class.

What majorities are required for a restructuring plan?

Each class is approved with more than two-thirds of the amount of its liabilities; three-quarters in the classes with security. The calculation is based on the amount of the claim, not on the number of creditors.

Can the plan bind dissenting creditors?

Yes, on two levels. Within a class that approves a plan, the majority links it to those who voted against it. And a plan not approved by all classes may be ratified if it is approved by a simple majority of classes, including a privileged class, or a class that would have received a payment based on the valuation of the operating company.

When is judicial approval required?

Where the plan seeks to extend its effects to creditors, classes or shareholders who did not approve it, to terminate contracts in the interests of the restructuring, or to protect interim and new financing. This is laid down in Article 638 of the TRLC.

What does a restructuring expert do?

It assists the debtor and the creditors in negotiations and draws up legal reports, including one on the value of the going concern. This is mandatory, amongst other cases, for the approval of a plan that has not been approved by all classes of creditors.

What are the effects of announcing the start of negotiations?

The notification under Articles 585 et seq. suspends the obligation to apply for insolvency proceedings and halts enforcement proceedings against assets necessary for the business. It lasts for three months and may be extended in accordance with the law.

How does it differ from insolvency proceedings?

The plan is a pre-insolvency arrangement. The debtor retains control of the business; there is no insolvency administration, and only the claims specified in the plan are affected. Insolvency proceedings are universal, covering all assets and all liabilities.

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