Last Wednesday, June 3rd, we were at ACICAE (Basque Automotive Cluster) giving a talk on streaming for their members about Bank Debt Refinancing and Financial Restructuring.
Throughout the life of companies there are times when their activity is not capable of generating enough resources to meet the commitments made. This situation will be almost generalized due to the business blackout caused by the Covid-19. The support and loans from the different institutions are in the form of loans and deferrals and consequently companies will face a situation of higher indebtedness and an uncertain recovery scenario and, therefore, with the need to accommodate the maturities of their debt to the cash flows generated by their activity.
In this talk, the keys to successfully face the process of refinancing the debt with the financial institutions were defined. To this end, it was explained how to define the refinancing strategy, how to put forward a refinancing proposal, how to establish the negotiation with the bank’s risk departments and advisors, as well as the legal implications of the refinancing (the Refinancing Framework Agreement: obligations it usually imposes and judicial homologation of the refinancing agreement: reasons and their effect on dissident financial institutions).