Additional measures to ease the terms of loans backed by public guarantees (financial debt restructuring)

In this article we will detail the main characteristics of the measures that have been taken to make financing more flexible for companies and the self-employed obtained through loans guaranteed by the Official Credit Institute (ICO).

This initiative will have an allocation of 3 billion euros that will be used to restructure the 121 billion euros in loans mentioned.

1. Requirements

• Companies and self-employed individuals with registered office in Spain (or in the case of non-resident non-financial entities operating in Spain through a permanent establishment) that have entered into financing operations that have public guaranteeUnder no circumstances may it have their tax domicile in a tax haven.
  • Granted by:

1. Credit institutions
2. Entity supervised by the Bank of Spain that grants loans or credits to companies and self-employed individuals with registered offices in Spain, between March 17, 2020 and March 13, 2021.
3. Spanish Reinsurance Company, SA (CERSA)

• The company or self-employed individual, where applicable and provided that the application period was in force, must have previously requested from the financial entities and these have communicated the formalization to ICO the measures of extension of deadlines and grace periods, included in Royal Decree-Law 34/2020, of November 17, on urgent measures to support business solvency and the energy sector, and in tax matters.
• Maintenance of the activity until June 30, 2022
• Do not distribute dividends or increase senior management compensation for two years
• Not to be ceased from activity at the time of application
• not have filed for bankruptcy.
• cannot be involved in bankruptcy proceedings (unless they are in the process of fulfilling an agreement)
• Not disqualified in bankruptcy proceedings (unless the disqualification period has ended).
• cannot have been declared insolvent in any proceedings
• not be subject to judicial intervention
• Not having been convicted by final judgment to the penalty of loss of the possibility of obtaining subsidies or public aid or for crimes of prevarication, bribery, embezzlement of public funds, influence peddling, fraud and illegal exactions or urban planning crimes.
• Not having given rise, for a cause for which he/she had been declared guilty, to the final termination of any contract entered into with the Administration
• Be up to date with tax and social security payments

2. Requirements

• Fees: Notarial and registry fees arising from the formalization and registration of these operations will be reduced by 50 percent.
• Depending on the criteria of each financial institution, the following may be agreed upon:

1. Extend the maturity date of publicly guaranteed loans for an additional period
2. Converting publicly guaranteed loans into participating loans, a measure that will strengthen the equity of the beneficiary companies by treating these loans as equivalent to capital for commercial purposes.
3. To grant (as a last resort and on an exceptional basis) direct aid to reduce the financing with public guarantee requested during the pandemic. (Articles 7 et seq. Royal Decree-Law 5/2021)

We remain at your disposal for any questions or queries you may have.

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Sonia Fernández Álvarez

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