On February 28 last the European Commission published the Draft Agreement on the withdrawal of the United Kingdom from the European Union (“EU”).

Garrigues detected that there was no clear guideline that allowed notaries to issue another enforceable copy of the mortgage deed to funds that had acquired NPLs.

The Directorate-General of Registries and Notaries (Dirección General de los Registros y del Notariado or DGRN) has issued an important ruling, which will enable international investors acquiring NPLs (non-performing loans) from Spanish financial institutions to speed up their recovery significantly, especially if the debts are secured with a mortgage guarantee.

FEBRUARY 2018 • SUMMARY v NEW LEGISLATION NOTIONAL PYRAMID GARRIGUES ARCHIVES CURRENT NEWS FEBRUARY 2018 - SPECIAL Nº50 (2009 - 2018) WHAT IS THE CURRENT SITUATION OF NPLs IN THE EUROPEAN UNION?

Continuing low interest rates and generally improved economic conditions in the U.S. and worldwide during 2017 have reduced financial distress and the need for business bankruptcies in most sectors. However, out-of-court financial restructurings and Chapter 11 bankruptcies will continue in 2018 due to significant market changes in the energy, retail and health care industries that have developed over the past several years.

On August 10, 2017, the U.S. Supreme Court rescinded the grant of certiorari in PEM Entities LLC v. Levin on the grounds that review had been “improvidently granted.” The case seemingly provided a perfect vehicle to resolve the circuit split on whether federal or state law governs debt recharacterization in bankruptcy, and less than two months after the Court first agreed to hear the case, its dismissal came as a surprise.

In recent years, courts have become increasingly critical of the doctrine of equitable mootness, a judicially created abstention doctrine that allows appellate courts to dismiss appeals from a bankruptcy court’s confirmation order in certain circumstances. Although the doctrine is meant to be applied only sparingly, to avoid unscrambling complex reorganizations on appeal, it has been invoked in noncomplex cases or where limited relief is practicable. As a result, some circuit courts have urged a more limited application of the doctrine.

Over the last several decades, the enforcement of intercreditor agreements ("ICAs") that purport to affect voting rights and the rights to receive payments of cash or other property in respect of secured claims have played an increasingly prominent role in bankruptcy cases. Although the Bankruptcy Code provides that "subordination agreement[s]" are enforceable in bankruptcy to the same extent such agreements are enforceable under applicable nonbankruptcy law, the handling of creditor disputes regarding such agreements has been inconsistent.i

Although political and economic uncertainties tempered corporate activity somewhat in 2016, the trends and fundamentals that have the potential to drive transactions remain in place in 2017.

Capital Markets

Crude oil and natural gas prices reached multiyear lows of approximately $26 per barrel for crude oil (as of January 2016) and $1.50 per million British thermal units (mmbtu) for natural gas (as of March 2016). This represented a 75 percent decline in the price of oil from its peak of approximately $105 per barrel in mid-2014 and an 80 percent decline in the price of natural gas from its early 2014 peak of over $8 per mmbtu. At the time, many industry observers predicted that depressed commodity prices would result in numerous bankruptcy filings and an uptick in M&A activity.

On January 17, 2017, the U.S. Court of Appeals for the Second Circuit issued an opinion in Marblegate Asset Management v. Education Management Corp., 15-2124-cv(L), 15-2141cv(CON) (2nd Cir. Jan. 17, 2017), overturning a broad interpretation of the Trust Indenture Act (TIA) by the U.S.