agreements and, subsequently, refinancing agreements, took a new approach to the valuation of this type of guarantees. The new regulatory scenario caused holders of secured credits to play a leading role in both types of agreements, and they could also be dragged along if the necessary majorities were met.
Thus, the condition of secured creditor went from being associated solely with the amount of the credit itself to being linked to its economic reality, i. e., to the value of the asset on which the collateral was granted; in other words, it became linked to the monetization of that asset and, therefore, to the real credit recovery. Therefore, relevance shifted from secured creditors to secured credits.
This regulatory adjustment has provided greater flexibility in designing and implementing pre-insolvency instruments, allowing a more agile and effective response to achieving business viability by giving a more economic sense to the design of these solutions.
1. Implications of valuating collateral in the context of restructuring plans: proper credit class formation and exit right
Identifying the key players of the restructuring is key to its success, so valuation of collateral( i. e., the assets that secure the credits to be affected in the restructuring) is fundamental to the process. This valuation is not only relevant for the formation of credit classes, which can determine both creditor and judicial sanction of the restructuring plan, but also regarding the right of creditors holding secured credits to disassociate themselves, in certain cases, from the measures imposed by the plan. 1.1. On the proper credit class formation The general criteria for credit class formation provided in article 623 of Act 16 / 2022, of September 5, amending the consolidated text of the Insolvency Act, allow for wide flexibility in grouping credits, as long as the legally mandated rules are respected, which can never be overridden. One of these imperative criteria( imposed by Directive 2019 / 1023, article 9.4 and recital 44) is found in article 624 of the Insolvency Act, which provides that credits with collateral on the debtor ' s assets form a single class. 2
Therefore, credits with collateral on the debtor ' s assets will form a single class but only for the amount covered by the value of the collateral( arts. 624 and 617.5 of the Insolvency Act). Consequently, the same credit position may be part of different classes depending on( i) the value of the collateral and also( ii) the nature of the unsecured credit.
The value assigned to collateral assets will be decisive for the proper formation of classes and, therefore, key to the success or failure of the restructuring plan, as explained below.
( a) On the one hand, the value granted to the collateral of each of the credits that make up the collateral class, i. e., the class composed of credits with collateral on the debtor ' s assets, is directly linked to the approval or rejection of the plan by that class, as it will determine the percentage of credits it represents for voting purposes. Specifically, the collateral class will be considered to approve the plan if at least three-quarters of the amount of the credits corresponding to it vote in favor( art. 629.2 of the Insolvency Act).
( b) Additionally, the approval of the plan by the secured class – linked to the valuation of the collateral – together with the approval by the other classes, will result in a consensual plan. 3 This will lead to the judicial sanction of the plan, provided that the other requirements stipulated in article 638 of the Insolvency Act are met.
2
Unless the array of assets or rights on which the collateral is granted justifies splitting them into two or more classes( art. 624 of the Insolvency Act), which, under the previous rule, cannot include unsecured credits.
3
For a restructuring plan to be consensual, it must be approved by each and every one of the affected classes( art. 638.3 of the Insolvency Act).
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