Spain | Legal Flash New developments regarding ICO-backed debt refinancing

Since the health crisis began, many companies have received financing guaranteed by the state through guarantee facilities managed by the Spanish State Finance Agency (Instituto Oficial de Crédito or “ICO”). For some companies, the lasting effects of the pandemic has led to difficulties in meeting payments for financial transactions.

In this scenario, the Spanish government has recently approved a set of measures enabling the potential renegotiation of these transactions while maintaining the public guarantee, as provided under Royal Decree-Law 34/2020, Royal Decree-Law 5/2021, and the Council of Ministers resolutions of May 11, 2021, approving a Code of Best Practices, which financial institutions can adhere to voluntarily.

This document outlines these measures and addresses the issues arising in respect of the possibility of refinancing transactions backed by these public guarantees, or restructuring the financial debt of companies carrying out a transaction within the framework of these facilities.