refinancing mortgage

Article 10 of Royal Decree-Law 16/2020 dealing with COVID-19 procedural and organizational measures contains the rules and regulations for the modification of a refinancing agreement:

1. During the period of one year from the declaration of the state of alarm (March 14th 2020), any debtor who has approval for refinancing a loan, has the right to inform the corresponding bankruptcy court that he has started or intends to start negotiations with creditors to change the agreement that was in force or to arrange a new one, even if a year had not elapsed since he applied for refinancing approval.

We’d like to make clear that although Article 10 itself does not specifically mention it, Section II of the preamble of the Royal Decree states that “the modification of the agreement or the out-of-court payment agreement or the approved refinancing agreement is facilitated”; therefore, the provision of article 10 refers not just to the approved refinancing agreement but also to the agreement for out-of-court payment.

2. In the six months following the declaration of the state of alarm, the judge will inform the debtor of all requests for declaration of non-compliance with the refinancing agreement presented by the creditors.

However, these will not be processed until one month after the end of the said six-month period.

During that month, the debtor may inform the corresponding bankruptcy court that he has started or intends to start negotiations with creditors to change the approved agreement or to arrange a new one, even if a year has not elapsed since he applied for refinancing approval.

If, within three months of receiving the communication from the court, the debtor has not reached an agreement to change the agreement in force or arranged a new one, the judge will admit and start processing requests from creditors for declaration of non-compliance.

 Find below the form to be submitted in Court:

Autos nº [AUTOS_NÚMERO]

TO THE COMMERCIAL COURT No. [NUMBER] OF [CITY]

Don / Doña [ Name of Court Agent] Court agent,  in the name and representation of the company [NOMBRE_EMPRESA] S.L./S.A., representation that is accredited in this proceeding , before the Court I appear and as best proceed in Law

I STATE:

Herein, in accordance with article 10 of Royal Decree-Law 16/2020, of April 28 dealing with COVID-19 procedural and organizational measures, by this missive I STATE THAT NEGOTIATIONS HAVE STARTED TO CHANGE THE REFINANCING AGREEMENT (or, where appropriate, TO REACH A NEW AGREEMENT), based on the following:

FACTS

FIRST.- That on date [DATE] I communicated to the Court the Start of Negotiations of the Refinancing Agreement in the terms provided for in article 5 bis of the Bankruptcy Law in order to reach a refinancing agreement and those provided for in the Article 71 bis.1 and in the fourth Additional Provision (or to obtain adhesions to an anticipated agreement proposal).

SECOND.- (Fill in according to any of the circumstances provided for in article 5 bis).

– That on date [DATE] a refinancing agreement has been presented for approval by that Court.

– That this Refinancing agreement has been approved by that Court by order of date [date].

– That these negotiations resulted in an out-of-court payment agreement.

 THIRD.- That the declaration of the State of Alarm and the measures adopted in this context have put my representative [NAME] in an economic situation that prevents him/ her from complying with the refinancing agreement reached. For this reason, my representative understands that it is inevitable and necessary to comply with the provisions of article 10 of Royal Decree-Law 16/2020, COVID-19 and therefore start new negotiations in order to change the refinancing agreement reached at the time and adapt it to the new circumstances.

For all this,

I APPLY TO THE COURT to consider and submit the present brief requesting the Start of Negotiations with the Creditors to change the refinancing agreement adopted on [DATE] (or, as the case may be, an approved refinancing agreement or an out-of-court payment agreement ) in accordance with the provisions of article 10 of Royal Decree-Law 16/2020.

This justice is requested in [CITY] on [DATE]

Signed Attorney [SIGNATURE]                                             Signed Lawyer [SIGNATURE]


Downloadable PDF:

María Luisa de Castro

DIRECTOR

María founded CostaLuz Lawyers in 2006 and is the Firm’s Director. María is registered Lawyer number 2745 of the Cadiz Bar Association and is licensed to practice in all areas of law throughout Spain. Working closely with her team, María has developed the firm into one of the most highly regarded and trusted Spanish Law Firms acting for English speaking clients with legal problems in Spain.

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