It is no secret that Spain’s economy has been deeply affected by the economic crisis. However, combinations of a change in the banking culture and legislative changes have opened up an interesting new market in restructuring of Spanish corporates.

Until 2010 the Spanish Market had seen little corporate restructuring, the main reasons being the absence of a ‘rescue culture’ and, above all, the type of security held by banks (mostly fixed charges).

Spanish banks have traditionally been more reluctant to adopt a “rescue culture” that allows for the reorganisation of viable businesses. This is mainly because of the types of security that Spanish banks hold: banks do not have an incentive to restructure (they can simply enforce their security); otherwise, they will be assuming a newly added risk that they can do without. Banks also have the further risk of antecedent transactions being legally set aside once insolvency proceedings start which would affect any pre-insolvency restructuring solutions

An amendment to the Insolvency Law came into force on 1st January 2012, resulting in further significant reform in the market and increasing focus on restructuring of solvent but struggling corporates. Despite the emphasis of the Insolvency Law being on the survival of the debtor as a going concern, the Amendment Law attempts to promote further a rescue culture in Spain by decreasing the number of companies that are declared insolvent and the number of insolvency proceedings that end with the liquidation of the company.

As a result of the growing acceptance of rescue culture and amendments to the insolvency law the Spanish restructuring market is huge. It is now seeing a great influx of firms vying to provide advisory services to embattled Spanish corporates and creating a strong position to deliver further advisory services as the market improves.

Alan Mitchell are currently representing a number of opportunities to move into this new, exciting and growing space and would be keen to here from anyone interested in taking up such a role.

Facts about Spain

Population: 48 Million Capital:
Madrid GDP: 1,415Bn$
GDP growth (real): 3.8% GDP (per capita): 33,700$
Labour force: 22 Million Unemployment: 7.6%
Inflation rate: 3.8%
Exports: 248.3 Bn$

For opportunities in this space please contact Ben Browning on (0207) 156 5172, or email Ben.browning@alan-mitchell.co.uk.