Business Restructuring: Refinancing Reports from Independent Experts

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Refinancing Reports from Independent ExpertsWhat is the context within which an Independent Business Report is requested and prepared in a refinancing processes?

When there is a refinancing agreement (“ agreement reached by the borrower under which the extension of the loan or the modification of obligations ” ) and the borrower makes a request.


 

 

Potential problems

In accordance with Additional Provision Four of the Bankruptcy Act (section 2), “In the case of bankruptcy, refinancing and business agreements, payments made and guarantees created during the execution of these agreements (referring to refinancing agreements), the termination clause established by Article 71.1 of that Law is not applicable, provided that the following requirements are met.:"

  • The agreement must be concluded by creditors that represent at least 3/5 of the borrower's liabilities at the date the refinancing agreement tees adopted.
  • The agreement must be reviewed by an independent expert designated by the Mercantile Registry with jurisdiction over the borrower's domicile, in accordance with the procedure established in Articles 338 and subsequent of the Mercantile Registry Regulations. The report from the independent expert will contain a technical opinion regarding the sufficiency of the information provided by the borrower, the reasonable nature of the plan and the ability to execute it in the conditions defined in section 1 and regarding the proportionality of the guarantees in accordance with normal market conditions at the time the agreement is concluded.
  • The agreement must be executed in a public document and will contain all supporting documentation for its content and compliance with the above requirements.”

Audit firms may be appointed as independent experts to prepare the independent expert report referred to above by the mercantile registry with jurisdiction over the borrower's domicile.

How can we help?

  • PwC is one of the leading professional service firms in Spain.
  • As a firm we comply with the legal requirements to be appointed as an independent experts.
  • We have extensive experience with work that requires the preparation of a technical opinion.
  • Our participation in evaluations of viability plans is very extensive, and we have participated in numerous reviews of company viability plans for companies of various sizes over the past few months.
  • We have a team of expert professionals within the context of refinancing processes and bankruptcy situations.
  • We offer the flexibility that is necessary to carry out the work in a timely basis and within the deadlines established by regulations.

The main stages for the preparation of an independent expert report:

  • Notification of the appointment by the Mercantile Registry.
  • Acceptance of the appointment, after an evaluation of any conflicts of interest that could exist.
  • Signature of the professional service mandate letter between the independent expert and the borrower.
  • Performance of the work and the preparation of the report. The initial deadline in one month from the date the mandate is accepted, and may be renewed on an extraordinary basis.
  • Communication of the issue of the report to the mercantile registry.