Miguel Lamo de Espinosa analyses the rise of debt purchases following the Celsa case | El Confidencial

Miguel Lamo de Espinosa, partner at Gómez-Acebo & Pombo, notes that distressed debt in Spain is attracting growing interest from investment funds. In particular, more funds are seeking to acquire debt from companies facing financial difficulties, with a view to converting it into equity or gaining influence in the company.

ecialist debt vehicles and some private equity funds are therefore taking positions in companies with complex financial situations. In many cases, they do so with the possibility of converting that debt into equity after a restructuring. This strategy has gained traction under the insolvency framework introduced in 2022. It also allows investors to intervene before companies reach pre-insolvency, helping preserve long-term viability and avoid deadlocks among shareholders or creditors.

According to Lamo de Espinosa: “Fundamentally, the interest is in credit funds or special situations. Private equity funds show interest, but it is harder for them to enter these types of situations. It is a process of education: this is not about buying distressed companies, but buying healthy companies within a distressed process. The difference is considerable.”

The Celsa case was especially significant. In that case, bondholders capitalised debt despite shareholder opposition and took control of the company. Other recent examples include Naviera Armas, Telepizza, Ezentis and Mr. Wonderful.

As a result, distressed debt is becoming a more established route for investors. At the same time, traditional M&A activity remains subdued. Venture capital funds are also beginning to explore this path as an alternative way to generate value and future returns.

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