Bad Bank Gains Power Over Decisions Concerning Insolvent Property Managers

10/09/2014 – El Economista

Sareb, also known as the bad bank, from now on may decide on be or not to be of the Spanish real estate firms that fell into insolvency arrangements. The Government has taken advantage of an amendment in ruling in order to improve the position of the company chaired by Belen Romana (pictured) so that Sareb could help to reach an agreement between lenders and debtors and to avoid liquidation of the latter, apart from providing them with financing to cover the indebtness.

The change is still a blueprint due to the importance of Sareb in the real estate sector of Spain. The bad bank holds €37.7 billion in medium and big size developer loans and in many cases it is their main lender.

As a consequence, its position at the negotiations will be key for the final decision.

The new law passed last week states that courts will give the green light to refinancing only when 51% of the lenders agree upon that.  Moreover, none of the rescued firms can have a stake in the bad bank.

Sources from Sareb assure the regulation is a formality as its vote has been considered since March when the new law came into force.

Besides, the bad banks decision will protect the creditors from debt forgiveness and the rest of the debt could be trasformed into equity.

Subsidized loans will correspond to four groups: labor, public, financial and others. At the moment of voting, Sareb may count on support of its ally, the Public Administration.


Original article: El Economista (by F. Tadeo)

Translation: AURA REE