Spanish renewable energy firm Abengoa S.A. was granted bankruptcy protection from creditors amid objections from a group of insurance companies who claimed that the company’s debt restructuring talks was unfair to U.S. creditors.
Previously, Abengoa had entered into a pre-insolvency standstill agreement with key creditors that gave the company time until 28 October 2016 to continue negotiations on restructuring its debt, which as per court papers, totals more than €14.6bn ($16.48bn).
However, a group of insurance companies, including Liberty Mutual Insurance Co., AIG and Zurich American Insurance Co., which had issued $250m in surety bonds tied to Abengoa’s construction of U.S. power plants, called the Spanish proceeding “manifestly contrary” to U.S. public policy because it forced them to abide by a standstill agreement without due process.
The insurance firms were arguing that the Spanish restructuring proceedings should only be recognized if they were identical to a U.S. bankruptcy proceeding.
With the approval from the U.S. Bankruptcy Court, Abengoa would receive all the benefits of U.S. bankruptcy law, including the so-called automatic stay that halts lawsuits and prevents creditors from seizing assets.