Clément Couloumy clement@altrium.co.uk
Over the past few years, Double LuxCo structures have become an increasingly common feature of Spanish financings, particularly in special situations and complex refinancing transactions. What was once seen as a highly structured solution is now frequently viewed as a pragmatic tool to align lender protection with borrower access to capital.
For international lenders entering the Spanish market, these structures offer a familiar legal and governance framework. For sponsors and borrowers, they can unlock financing that might otherwise be difficult to secure. When properly implemented, Double LuxCo structures are not an adversarial mechanism: they are a structural solution that benefits the entire capital structure.
1) Why this structure is attractive in cross-border Spanish deals
Spain has a sophisticated insolvency and enforcement framework, sometimes seen as one of the most creditor-friendly of southern Europe, but in distressed scenarios enforcement can be procedurally complex and time-consuming. In parallel, cross-border lenders increasingly underwrite with a strong focus on execution certainty in a downside scenario.
This is where Luxembourg often plays a role: the Luxembourg Financial Collateral Law (5 August 2005 and 2022 and 2024 updates) is widely recognised as providing an efficient, contract-driven enforcement framework for pledges over financial collateral (including shares), with significant insolvency robustness.
2) What “Double LuxCo” actually means
In a typical Double LuxCo structure, two Luxembourg holding entities sit above the operating group. Lenders commonly take:
- A pledge over the shares of the LuxCos (often structured to benefit from the Luxembourg collateral regime)
- Security/assignment over related intra-group receivables (where relevant).
The practical outcome is that enforcement leverage sits at the Luxembourg holding level rather than immediately at the Spanish operating company level, allowing creditors to take control of the holdco layer while seeking to preserve operational continuity at OpCo.
3) Why lenders push for it: enforceability, speed, and predictability
From a lender’s perspective, Double LuxCo structures provide three key advantages: control, enforceability and predictability.
First, they allow lenders to rely on Luxembourg’s well-established security regime, which is widely recognised for its efficiency and clarity.
Second, enforcement at the LuxCo level can often be executed more quickly and with greater certainty than pursuing remedies directly against the operating company.
Third, the structure typically incorporates a controlled cash waterfall, ensuring that cash generated by the operating group flows through a transparent and contractually governed payment hierarchy.
For lenders operating in cross-border environments, these elements significantly reduce structural risk.
4) Why borrowers benefit: access to capital and lower structural friction
While Double LuxCo structures are often perceived as lender-driven, they can also deliver meaningful advantages to borrowers and sponsors.
In special situations, lenders often price not only credit risk but also structural and enforcement uncertainty. A structure that improves enforcement predictability can reduce that uncertainty premium and help unlock:
- broader lender appetite (including international funds)
- greater certainty of execution
- and in some cases, improved commercial terms or increased available leverage (because downside pathways are clearer)
Additionally, by structuring enforcement rights at the holding level, the operating business can often continue running with less disruption in downside scenarios. This can preserve enterprise value and maintain operational stability during restructuring discussions.
Put simply: stronger structural discipline can translate into better financing outcomes. Not despite the structure, but because of it.
5) Execution matters: the synergy between corporate servicing and loan agency
A Double LuxCo is only as good as its execution and day-to-day operation.
In practice, these structures often involve:
- Luxembourg corporate administration (governance, directors, filings, KYC, account bank, cash management)
- The financing agency layer (notices, lender communications, cashflow mechanics, enforcement-readiness).
When these roles are performed by separate parties, coordination can become more complex, particularly in situations where enforcement readiness is critical.
Where the same independent party provides both (i) corporate servicing for the LuxCos and (ii) agency/security agent services, the structure can become materially more robust operationally:
- Fewer handoffs between providers
- Tighter control of notice and enforcement mechanics
- Better coordination of account control / cashflow processes (where implemented)
- Lower overall friction and cost for sponsors.
When the same independent provider acts as both corporate servicer for the LuxCos and loan or security agent for the financing, the structure benefits from a significantly more streamlined operational framework. The party responsible for administering the corporate entities is also the one operating the payment waterfall and managing lender instructions while it is also much more cost effective for the sponsor.
As the use of Double LuxCo structures continues to grow in Spanish financings, particularly in special situations, their success will depend not only on the legal design of the structure but also on the operational infrastructure supporting it. When implemented thoughtfully, these structures can deliver exactly what cross-border financing increasingly requires: predictable enforcement, transparent governance and alignment across the capital structure.
Clément Couloumy
Full transparency: Double LuxCos & Loan Agency are part of what we do. We incorporate Luxembourg corporations and open bank accounts in less than a month in most scenarios.