Most restructuring professionals will tell you that there is no “typical” restructuring. That is absolutely true. Every financially distressed business is different and the character and direction of its restructuring will be highly dependent upon, among others, its capital structure, its liquidity profile, and the level of support it can build for its reorganization among key stakeholder bodies. Nevertheless, there are some important similarities in the way that any company should initially address a distressed situation.

The oil and gas industry in Texas is currently facing a double whammy from the recent oil price shock and COVID-19 related demand reductions. While exploration and production operators in Texas are proactively taking self-help measures to reinforce their financial frameworks — reducing capital spending, operating expenses, overhead and dividends — the outlook remains highly uncertain.

In recent years, it has become common practice in large chapter 11 cases for debtors to include language in their proposed chapter 11 plan which purports to release certain nondebtors from the claims of third parties. Although some third parties may consent to the release—such as by voting in favor of the plan or otherwise electing to do so during the plan solicitation process—circumstances frequently arise in which the debtors seek approval from the bankruptcy court to release nondebtors from third parties’ claims without the consent of the third parties.

This paper aims to briefly describe the scenarios where acts or actions might be rescinded (particularly in the context of refinancing or debt restructuring of Spanish companies) pursuant to the Spanish Insolvency Act (“SIA”) and the consequences of rescission from a legal standpoint. Procedural questions related to the subject matter are not analyzed in this document.

What acts can be rescinded?

1. Introduction

Given the situation of Spanish market generally —and the latest reforms on restructuring of the financial sector more particularly— it seems that cash flow shortage may be ongoing in the near to mid term future for some Spanish corporations. Upon this situation stressed or distressed companies may consider rescue financing alternatives in substitution —or in addition to— other traditional funding. Generally within a broadest restructuring deal, non-bank lenders may have an interesting role to play in providing for liquidity facilities.