NPLs & Distressed Debt
Non-Performing Loans (NPLs) are loans in arrears over 90 days, traded at discounts of 60-95% of nominal value. Spain is Europe's second-largest NPL market with over 76 billion euros in stock. We assist investment funds, family offices, servicers and individuals throughout the entire NPL lifecycle: from portfolio due diligence to judicial recovery, including defence of debtors whose loans have been acquired by a fund.
How we help
- Legal due diligence of NPL portfolios (secured and unsecured)
- SPA (Sale and Purchase Agreement) negotiation
- Credit assignment before notary and Registry (art. 1526 CC)
- Procedural succession in ongoing proceedings (art. 17 LEC)
- Structuring of acquisition vehicles (FAB, FT, SL)
- Article 1535 CC litigious credit retraction analysis
- Negotiation of haircuts and dation in payment with servicers
- Defence against foreclosures and abusive clauses
- Second Chance Law for individual debtors
- REO (Real Estate Owned) advice
Our process
Initial analysis
For investors: portfolio perimeter assessment. For debtors: verification of the acquiring fund's standing and assignment chain.
Due diligence
Title validity, procedural status, real guarantees, valuations, limitation periods, abusive clauses (LCCI) and post-acquisition litigation risk.
Structuring
SPA negotiation, representations & warranties, exclusion criteria and efficient tax structure for the acquisition vehicle.
Closing and assignment
Notarial assignment, registry inscription of mortgage guarantees and formal notification to the debtor.
Post-closing management
Servicer transition, recovery strategy, foreclosure and NPL-to-REO conversion when applicable.
Frequently asked questions
Can I buy an NPL as an individual investor?
Yes. Although the wholesale market is dominated by large funds, there are ways to acquire individual positions, especially through judicial auctions. We verify the title is sound and the investment has real recovery potential.
A fund has bought my mortgage. What can I do?
First we analyse if the assignment is valid, if you were properly notified, and if there are abusive clauses in your original loan. In many cases we negotiate haircuts of 40-70% with the servicer, dation in payment or apply the Second Chance Law.
What is the Article 1535 CC retraction right?
It allows the debtor, when their litigious credit has been assigned, to extinguish the debt by paying the buyer the actual price paid plus costs and interest, within 9 days of the claim. It has limitations on block assignments but can be a powerful tool.
Is it legal for a bank to sell my debt without notifying me?
Yes. The Civil Code doesn't require debtor consent for assignment, but the debtor must be informed. EU Directive 2021/2167 reinforces information obligations once fully transposed.
Can I apply for the Second Chance Law if my debt is held by a fund?
Yes. The creditor's identity does not prevent access to the mechanism of exoneration of unsatisfied liabilities. It is a very effective route for individual debtors in insolvency, even if their loan has been sold by the bank to a foreign investment fund.
Need help with NPLs & Distressed Debt?
Contact us for an initial consultation with no obligation.