A few months ago, the Spanish business world witnessed one of the most impressive restructurings in recent years. The Villar Mir Group, a conglomerate that seemed doomed under the weight of more than €1.5 billion in debt, has managed to rise from the ashes by reducing its obligations to just €120 million.
How is such a transformation possible? The answer lies in a masterful combination of legal tools, financial strategy and, let’s be honest, a good dose of business pragmatism.
Anatomy of a crisis that became an opportunity
Let’s provide some context. We are talking about a business group with a presence in sectors as diverse as construction, real estate and fertilisers, carrying a debt of over €1.5 billion. Few solutions in sight?
But the business reality has proven to be much more sophisticated. On 26 September 2024, Madrid Commercial Court No. 3 approved a restructuring plan affecting 332 million of the total debt of 435.5 million, setting a precedent that many lawyers and businesspeople will study for years to come.
The protagonists of this story of survival
In every major restructuring there are key players, and this case is no exception:
Tyrus Capital, the fund that played the role of white knight. Not only did it finance the group at its most critical moment, but it also accepted conditions that few would have considered: a significant rescheduling that included the option of cancelling debt in exchange for 8.5% of the capital. A risky move that speaks to long-term vision.
Emperador Properties, the creditor that became the necessary «killjoy» in the process. Its opposition to the plan and subsequent appeal to the Provincial Court of Madrid is not capricious: it represents the interests of those who believe that the deal was not fair. Its conditions are very harsh: wait up to seven years without interest for the ordinary loan (31 million) and up to 12 years for the subordinated loan (3.3 million).
The master moves
What is fascinating about this case is how strategic moves were executed that, in hindsight, seem textbook:
Smart divestments: The sale of assets such as Priesa to Aedas for €50 million was no coincidence. It was precision surgery to generate liquidity just when it was most needed.
Management of creditor classes: Divide and conquer, but in a legal and transparent manner. The formation of different classes allowed for priority voting, facilitating majority agreements without the need for unanimity.
From our experience at Confianz, this case represents a turning point in how we understand restructuring in Spain. The insolvency reform has provided the system with tools powerful enough to preserve business value even in situations of extreme illiquidity.
What this process really teaches us
The importance of anticipation: The best results in restructuring do not come from improvisation. The Villar Mir Group did not wait until it was too late to act.
The transformative role of international funds: Tyrus not only contributed money, but also a different strategic vision. Specialised funds understand that sometimes it is better to recover 60% of an investment than to lose 100%.
Complexity as an ally: Far from being an obstacle, today’s legal sophistication allows for solutions that would have been unthinkable a decade ago.
Risks we cannot ignore
However, this process is not all positive. We have identified several points of concern:
Dependence on a «single saviour»: Over-reliance on a single creditor can create power imbalances that complicate future negotiations.
The time factor: Legal proceedings, however effective, remain susceptible to delays that can render a viable company unviable.
Managing expectations: As we see with Emperador Properties, not all creditors will be satisfied with the final outcome.
If there is one thing this case teaches us, it is that preparation is essential. We are not talking about waiting for the storm to arrive before buying an umbrella.
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The new rules
Speed vs. consensus: International funds operate on more aggressive timelines than traditional creditors. This can speed up processes, but it can also create tensions.
Professionalisation of crisis management: It is no longer enough to have a good insolvency lawyer. Multidisciplinary teams capable of thinking in legal, financial and strategic terms are needed.
Internationalisation of processes: With foreign funds playing a leading role, Spanish restructurings will increasingly have international components.
Turning crisis into opportunity
The Villar Mir case is a practical manual on how to execute a restructuring that transcends the immediate crisis to become a platform for future growth.
At Confianz, we will be following these developments and updates on this case very closely because they confirm our convictions about the importance of comprehensive preparation and specialised support. The Villar Mir case shows that with the right strategy, crises are not only overcome: they become catalysts for transformation.