Double LuxCo Structures in Spanish Financings

Double Luxco structures in Spanish financings: an old friend back in focus

SFF Magazine March 2026

Topics: Real Estate, Trends

Introduction: why Double Luxco structures matter again

In recent years, acquisition and real estate financing structures have been tested by market volatility, refinancing pressure and a more cautious credit environment. At the same time, alternative lenders and private credit funds are playing an increasingly prominent role, particularly in mid-cap and sponsor-driven transactions involving Spain. These dynamics have renewed the focus on enforcement certainty and jurisdictional predictability.

In this context, Double Luxco structures are attracting renewed attention thanks to their core strengths: legal robustness, efficient control and swift enforcement options. These structures continue to play a central role in Spain linked acquisition and real estate financings and refinancings, where lenders seek a robust security framework that remains effective across borders. Double Luxco structures have proven to be reliable and effective structuring options for over two decades.

Overview of the Double Luxco set-up

A Double Luxco structure involves two Luxembourg holding companies. A top Luxembourg holding company (Top Luxco) holds all the shares in a second Luxembourg company (Bottom Luxco), which in turn usually owns the local special purpose vehicle holding the relevant asset; whether real estate, infrastructure or an operating business. Top Luxco sits above Bottom Luxco and Bottom Luxco, which can or not be the borrower of the third-party debt, is typically designed as the single point of enforcement.

“Double Luxco structures are attracting renewed attention thanks to their core strengths: legal robustness, efficient control and swift enforcement options.”

Historically, Double Luxco structures emerged as a response to enforcement risks arising under certain local insolvency regimes, notably in France, and to manage the implications of the EU insolvency framework. In particular, considerations around the determination and potential relocation of a company’s centre of main interests (COMI) have been central to the structuring analysis, as they directly affect jurisdiction and the effectiveness of enforcement strategies.

Today, Double Luxco structures remain widely used in financings involving Spanish assets, as well as other European jurisdictions. Far from being an exotic or aggressive structuring tool, the Double Luxco has become a market-standard solution in cross-border financing transactions.

The Luxembourg share pledge and the Luxembourg Collateral Law

The effectiveness of a Double Luxco structure and the enforcement of the related security package rests primarily on the Luxembourg law governed share pledge granted by Top Luxco over the shares it holds in Bottom Luxco, often combined with security over intercompany claims and local bank accounts. This pledge is designed to benefit from the Luxembourg law of 5 August 2005 on financial collateral arrangements (the Collateral Law), which remains one of the most lender-friendly and robust security regimes in Europe.

The Collateral Law offers a number of advantages for lenders providing a high degree of contractual freedom, allowing parties to tailor enforcement triggers and remedies. Enforcement is designed to be swift and efficient, without court involvement or prior notification requirement, and the pledge benefits from an insolvency-proof character, meaning it can generally be enforced notwithstanding the opening of insolvency proceedings in Luxembourg or abroad, and even where it has been granted during the so-called suspect period.

A key feature is that enforcement may not be limited to situations where secured obligations are due and payable. This allows lenders to react to a broader range of trigger events, including covenant or contractual breaches, well before a full payment default occurs. Compared to more rigid enforcement regimes in other European jurisdictions, the Collateral Law provides a high level of predictability and effectiveness.

Furthermore, the enforcement of security governed by the Luxembourg Collateral have consistently resisted challenges in front of Luxembourg courts, who have repetitively confirmed the effectiveness of such security and their enforcement.

Control without immediate “hard” enforcement

One of the most distinctive aspects of Double Luxco structures is the ability for lenders to exercise meaningful control on the structure, and indirectly the underlying asset, without immediately enforcing the share pledge. This is particularly relevant when facing more risky investment structures or (pre) distressed financing scenarios.

Market practice frequently includes provisions allowing lenders to exercise voting rights attached to the shares of Bottom Luxco upon the occurrence of agreed trigger events. These rights may include, for example, the removal and appointment of directors at the Bottom Luxco level. Such mechanisms allow lenders to stabilise governance, protect asset value and prevent detrimental actions, while keeping the appropriation of shares option in reserve.

“One of the most distinctive aspects of Double Luxco structures is the ability for lenders to exercise meaningful control on the structure, and indirectly the underlying asset, without immediately enforcing the share pledge.”

COMI protection is another key objective. The structure, together with the contractual framework, is designed to prevent a hostile or opportunistic shift of Bottom Luxco’s COMI outside Luxembourg, which could otherwise expose the structure to foreign, less efficient, insolvency proceedings and undermine or delay the expected enforcement outcome. Asset localisation techniques are often used to ensure that the pledged shares remain clearly located in Luxembourg, reinforcing protection and supporting recognition under EU insolvency rules.

If “hard” enforcement becomes necessary, the Luxembourg-law governed share pledge provides a clear and efficient route, enabling lenders to appropriate or dispose of the shares in Bottom Luxco under the framework of the Collateral Law, without court involvement.

Lender protection in enforcement and distressed scenarios

Beyond its structuring and governance benefits, a Double Luxco arrangement also serves as a risk-mitigation tool in situations of financial stress. Where the underlying asset is located in Spain, local insolvency or restructuring proceedings may delay or complicate enforcement at the asset level. In that context, the share pledge at the Top Luxco level offers a Luxembourg-law governed enforcement route, that is largely insulated from local and foreign procedural constraints.

This predictability is particularly relevant in refinancings and transactions involving alternative lenders or mid-sized unregulated lending undertakings, which typically place strong emphasis on the ability to act swiftly if performance deteriorates. The same logic applies to financings of distressed or transitional assets, where lenders seek comfort that their security will remain robust even if the asset’s financial or operational profile shifts rapidly. In these scenarios, the combination of governance rights, flexible enforcement triggers and a dependable legal framework strengthens negotiating leverage, supports early intervention and, where necessary, enables an orderly assumption of control over the asset-holding chain.

Finally, if properly structured and implemented, a Double Luxco structure will not trigger adverse tax consequences.

Conclusion: enduring relevance

Double Luxco structures are not a passing trend. They remain a well-established and resilient solution for structuring financings backed by tangible assets, particularly in cross-border contexts involving Spain, as well as other European jurisdictions. Their continued relevance is driven by the Collateral Law, which offers a combination of flexibility, enforceability and protection against insolvency-related disruption.