Restructuring bankers see bigger role in Spain

By Elena Moya - Analysis

LONDON (Reuters) - Restructuring bankers are a rare breed in Spain, where troubled companies tend to turn to lawyers for help, but this is beginning to change as Spanish companies come up against aggressive international creditors.

"Spanish debtors and creditors still approach distressed situations without advisers other than lawyers, who are mainly used to documenting what the principals agree, based on relationships," said Manuel Martinez-Fidalgo, senior vice president for U.S. investment bank Houlihan Lokey's special situations group in London.

"But relationships are becoming less and less important as players driven by pure economics, and not by relationships, enter the market."

As a result of a sharp downturn in the property sector, the number of firms in danger of tipping into insolvency has ballooned.

International law firm Freshfields has seen its cases double this year, according to partner Fernando Bautista, who says scarcity of insolvency expertise in the country has become an issue.

"The court process is slow, the judges' knowledge is limited and there's not a lot of accommodation to international players," he said.

The emergence of hedge funds and buyers of collateralized loan obligations (CLOs) as creditors of companies such as real estate firm Martinsa Fadesa (MFAD.MC: Quote, Profile, Research) has added to the complexity of the process.

Original lenders have sometimes been forced to accept disadvantageous conditions in order to avoid further losses, bankers have told Reuters.