The ruling in the Celsa case sets a precedent in Spain because it is the first resolution that gives free rein to creditors to take control of a company without the consent of its owners. Leaving aside the distance, the sensation is still similar to that of an expropriation, in this case justified because the company is unable to repay its credits as it finds itself in a situation of current or imminent insolvency.
“We were all waiting to see if the judge would dare to transfer the ownership of Celsa to the creditor funds and finally we have verified that yes, that the application of the European regulations included in the new bankruptcy law left no other option. Without a doubt, we are facing a paradigm shift in the company restructuring sector,” comments Gerard Solé, lawyer at the Fils firm specialized in bankruptcy law.
Thus, Barcelona’s number 2 commercial judge, Álvaro Lobato, has paved the way in hitherto unknown territory. The next steps established by the sentence include the execution of the restructuring plan under the supervision of the Lexaudit company, the appointment of a board of directors and the departure of the Rubiralta family. But before all this happens, the operation must be authorized by the Council of Ministers since the investment funds that are going to take control of this strategic group – billing 6,000 million and employing some 10,000 people – are from foreign countries, such as Germany. , United Kingdom, Luxembourg or the United States.
Although it is unlikely – the Ministry of Industry has said that it will have maximum respect for the judicial decision – the Government’s refusal would render the resolution null and void. And the Celsa case would return to square one, with a debt close to 3,000 million euros and a high risk of insolvency.
The only viable option is, according to the judge, to apply the restructuring plan proposed by the creditor funds (Deutsche Bank, SVP, Cross Ocean…). This is established in the ruling, which has already raised concern and some doubts in the sector. “The resolution establishes the obligation to maintain jobs, but it seems like a dead letter to us, temporary specifications are no longer set and market circumstances may worsen in the short or long term,” warns Javier Pacheco, general secretary of the CC union. OO. in Catalonia.
According to the legal framework, any alternative implementation of the plan – which, for example, contemplates job cuts or the division of the group into companies – must have prior authorization from the judge, so the guarantees of the plan are protected by judicial means. Legal sources add that failure to comply with the restructuring plan by creditors does not entail any type of penalty or sanction. In this situation, the injured parties could file a general liability action for non-compliance with a judicial resolution.
Beyond the execution of the sentence, the Celsa case will set a precedent in many matters and will have an impact on the functioning of the Spanish economic fabric. “The fact that the creditors take control without the consent of the partners may seem radical, but this assumption serves to alert the business community that mechanisms must be activated before it is too late. This is what the bankruptcy reform intended when it came into effect a year ago”, considers Javier Castrodeza, a lawyer with a long career in the field of bankruptcy law.
Precisely, the main objective of the bankruptcy reform is to avoid the declaration of bankruptcy, which in its vast majority lead the business to liquidation. In fact, with the same desire to save the future of a business, the law makes it impossible to appeal in sentences such as the Celsa case. “Although the intention is good, that generates a greater feeling of lack of protection. In a bankruptcy process, there is the possibility of filing an appeal and more guarantees are also given, such as the publicity of the process, the appointment of a bankruptcy administrator by the judge, and not an independent expert, which in the case of Celsa has been proposed by the creditors themselves,” says Solé.
After Celsa’s ruling, we can expect, according to the experts consulted, more cases in which creditor funds take control of family businesses without the consent of their owners. Is the family business fabric at risk? The law provides for an exception for SMEs with fewer than 49 workers and income of less than 10 million euros. In this case, the owners can veto the entry of creditors into the shareholding. But in companies with a greater impact on the market, the situation that the Rubiralta family has experienced may be repeated. And for this reason, Spain is, according to the lawyer from the Fils firm, an increasingly attractive country for investment funds specialized in buying debt in companies that are at risk of insolvency.
