PradaGayoso updates Guide to Dealing with Corporate Financial Distress


The revised document will serve as a guide to the business community in anticipation of the removal of emergency governmental support put in place during the pandemic

Financial restructuring firm PradaGayoso has revised its Guide to Dealing with Corporate Financial Distress in order to provide Spanish companies with guidance in anticipation of the phasing-out of the emergency governmental support put in place during the pandemic, that will come to an end during the first half of the year.

In particular, the ERTE Government subsidized furlough scheme is set to end on 28 February. Furthermore, 14 March is the deadline to have contributions by shareholders made within the scope of bankruptcy proceedings treated as ordinary loans -instead of subordinate loans-, thus entitling shareholders to vote should an arrangement with creditors occur.

In the second quarter of the year, the two-year grace period for most ICO loans will come to an end. In addition, the insolvency moratorium will expire on 30 June and it is expected that the amendment to the consolidated Bankruptcy Act will also be in force as of that date, since the process for parliamentary approval is already underway.

Other issues that will determine the financial outlooks for Spanish companies in the first half of 2022 are the uncertainty around the economic recovery and the concerns about the arrival and implementation of EU Next Generation funds.

In this context, the second edition of the PradaGayoso Guide to Dealing with Corporate Financial Distress describes -from a hands-on perspective- the steps companies must take to face a restructuring process with the best prospects of success:

  1. Setting up a multidisciplinary team of specialists
  2. Monitoring the company's key indicators
  3. Preparing the key documents for restructuring in good time
  4. Conducting an initial diagnosis and outlining a preliminary target, and reviewing it with external advice
  5. Selecting the preferred option and considering contingency plans for adverse scenarios
  6. Preparing a detailed action plan according to target –i.e., closing the company, and thus limiting risks for directors, maintaining the company as a going concern and transferring control; or retaining both the company and control.

This Guide, resulting from PradaGayoso’s more than 40 years’ expertise, is aimed at filling the gap between academic publications –highly valuable from an intellectual perspective but with a limited operational approach- and the contents available on the Internet, mostly lacking an in-depth or instructional approach to this subject.

For PradaGayoso partner Guillermo Prada, the Guide may also prove useful for financially robust companies: ‘It may help them identify the adverse scenarios that some of their customers or suppliers may be heading to and also assist them to recognise opportunities to purchase certain assets that may add value to their business.’