Spain extends voluntary debt cancellations for companies to deal with pandemic

MADRID, Nov. 30 (Reuters) – The Spanish government on Tuesday approved a six-month extension, until June 2023, for voluntary cancellations of state-guaranteed loans as part of a debt restructuring plan for help businesses cope with the COVID-19 pandemic, the economy ministry said.

The plan follows recent extensions granted by the European Commission for the support measures and was in line with a Reuters report last week. Read more

A package of measures to help companies reduce excess debt and improve solvency, including € 3 billion ($ 3.36 billion) in debt restructuring, was approved in March, incorporated into a voluntary code of conduct to be implemented by banks.

While the focus of the relief measures has been on liquidity solvency issues across Europe, Spanish companies have also been able to apply for equity loans, a hybrid instrument that companies can convert into equity.

The government has also extended these until June 2022 from December for companies considered solvent and extended the deadline for self-employed workers and businesses to request an extension of their repayment period.

The code of good practice will also be amended to allow businesses and households affected by the eruption of the La Palma volcano to apply for credit support measures.

Under this code, Spanish banks are asking for the voluntary cancellation of existing public loans as part of the debt restructuring of companies whose income has fallen considerably.

At the start of the pandemic, the government approved state-guaranteed loans worth 100 billion euros to help businesses and households cope with their liquidity lines, followed later by 40 billion euros. euros in investment loans. Both measures were extended this month. Read more

Write-offs are considered a measure of last resort under a loss sharing scheme set by each loan.

Report by Jesús Aguado, edited by Andrei Khalip and Ed Osmond

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