SPAIN Law and Practice Contributed by: Antonio Paredes, Carlos Saldaña, Manuel Martínez and Román Mejías, ZADAL
ed as a contractual treasury arrangement rather than under a specific statutory regime. Private credit lend - ers focus on the intra-group creditor/debtor positions it creates and, above all, on cash visibility and control in a downside or enforcement scenario. Treatment Versus the Cash Pooling Bank and Hedging/Cash Management Where the cash pooling bank is also the account bank, it may have strong practical leverage (account control and potential set-off), so deals usually either treat it as capped “super senior” within the intercredi - tor framework or restrict/dismantle cash pooling in favour of controlled accounts, supported by account bank agreements, ring-fencing and springing cash dominion. Hedging and cash management liabilities are typically addressed through intercreditor mechan - ics as secured (sometimes super senior) obligations within agreed limits, with eligibility criteria, caps and turnover/waterfall provisions to make priority predict - able and enforceable. 5.10 Appointment of Collateral Agent Holding Security Through an agent in Spain Spanish law does not expressly recognise a common law “security trustee” model, and Spanish-law in rem security is generally accessory to the secured claim, so the beneficiaries of the security should be the lend - ers/creditors rather than a standalone collateral agent. As a result, the “security agent” role in Spanish deals is usually an administrative/enforcement co-ordination role (acting under powers of attorney and contractual instructions), not a true holder of the lien in its own right. Parallel-debt style constructs are not generally recognised in Spain and are used cautiously. Assignments and Whether Security Must be Updated In principle, because security is accessory, security should follow the transfer of the secured loan. How - ever, registrable security (most importantly mortgag - es, and certain registrable movable security) often requires formal documentation and registry updates (eg, an assignment of the mortgage/right and corre - sponding filings) to ensure the new lender can com - fortably prove priority and exercise enforcement rights against third parties. If these steps are not taken, the risk is usually not that the security “disappears”,
but that enforcement and third-party effectiveness become operationally harder, and costs/taxes may arise on the documentation or registration process. Typical Market Solutions to Manage These Constraints Private credit lenders usually address these Spanish- law limitations by designing transfer mechanics that minimise repeated perfection work, for example: • using a fronting/record lender (often a bank) with funded participations/sub-participations behind it, so the secured creditor on record does not change frequently; or • allowing assignments but requiring the agent (as attorney-in-fact) to run a documented “security update” process (including notarial and registry steps where needed) within an agreed timetable and cost allocation. In both cases, documentation focuses on making transfers workable while preserving enforceabil - ity: clear powers of attorney, obligations to execute registry-facing documents, and intercreditor/agency mechanics that keep enforcement co-ordinated even though the security is, legally, for the benefit of the lenders. 6. Enforcement 6.1 Enforcement of Collateral by Non-Bank Secured Lenders Preconditions and Key Limitations A non-bank secured lender in Spain may enforce col - lateral following a material event of default, provided the finance documents include valid acceleration mechanics. For mortgages, enforceability depends on proper Land Registry registration. Enforcement is constrained by formal notice and valuation require - ments, statutory priority rules and, in insolvency, potential clawback and stay-type limitations; creditor appropriation is generally prohibited under the pacto comisorio principle, with limited exceptions (eg, cer - tain cash/financial collateral arrangements).
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