Introduction to Insolvency in Spain
If a business or individual in Spain can no longer meet its financial obligations, the insolvency procedure (concurso de acreedores) is triggered. This legal process:
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Protects creditors’ rights
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Allows for business restructuring or liquidation
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Ensures fair asset distribution
At Borderless Lawyers, we represent both insolvent parties and creditors in navigating this complex procedure under Spanish commercial law.
🧭 Key Phases of the Insolvency Procedure
1. 🟡 Pre-Insolvency Stage (Preconcurso)
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Companies that anticipate insolvency can notify the court to buy time (up to 12 months)
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Allows negotiations with creditors to restructure debt
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Public registry entry suspends enforcement actions
📌 This phase encourages out-of-court solutions and recovery planning.
2. ⚠️ Voluntary or Compulsory Insolvency
| Type | Trigger | Who Files |
|---|---|---|
| Voluntary | Debtor files within 2 months of recognizing insolvency | Company/Individual |
| Compulsory | Filed by creditors when debts are unpaid | Creditors |
🔍 Courts may impose fines if insolvency is filed late or fraud is suspected.
3. 🧑⚖️ Declaration of Insolvency
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The Mercantile Court declares insolvency
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A judge appoints an Insolvency Administrator (administrador concursal)
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Company management loses control or shares it with the administrator
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Bank accounts and asset management become supervised
🛑 Creditors cannot take individual legal action after this stage.
4. 📃 Creditors’ List & Classification
The insolvency administrator prepares:
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📋 A list of recognized creditors
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🔍 Classification into:
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Privileged (e.g. tax authorities, employees)
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Ordinary
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Subordinated (e.g. related-party loans, late-filed claims)
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Creditors are invited to submit claims within 1 month of publication.
5. 🔄 Agreement or Liquidation
There are two potential outcomes:
🛠️ Restructuring Agreement (Convenio)
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Negotiated plan to pay creditors and continue business
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Requires approval of majority creditors
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Court must ratify the plan
🏚️ Liquidation (Liquidación)
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If no agreement is reached or insolvency is deemed irreversible
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Assets are sold to repay debts
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Business is dissolved and deregistered
📌 Insolvency can be converted to liquidation automatically under certain conditions.
💼 Duties of the Insolvent Debtor
During the process, directors and administrators must:
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Cooperate with the court and administrator
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Avoid wrongful trading (operating while insolvent)
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Submit accurate financial records
⚠️ Failure to comply may result in personal civil or criminal liability.
💰 Creditors’ Rights in Spanish Insolvency
Creditors can:
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File for insolvency
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Submit and appeal claims
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Challenge fraudulent transfers
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Participate in restructuring plans
Foreign creditors have equal rights under Spanish and EU insolvency law.
🔁 Cross-Border Insolvency Cases
Spain applies EU Regulation 2015/848 for cross-border cases:
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Mutual recognition of insolvency proceedings
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Coordination with foreign courts
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Cooperation with foreign insolvency administrators
🌍 This is key for multinational businesses or foreign subsidiaries operating in Spain.
💬 Real-World Example: UK Supplier Recovers Funds
A UK-based electronics supplier was owed €220,000 by a Spanish retailer that entered insolvency. We:
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Filed the creditor’s claim on time
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Protected their position as a privileged creditor
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Recovered 86% of the amount via structured payments
✅ Outcome: Strategic filing + creditor classification maximized recovery.
🚀 Get Expert Help with Insolvency in Spain
Whether you’re a struggling business or a creditor trying to recover debts, Borderless Lawyers provides:
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✅ Legal filing of insolvency procedures
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✅ Director liability protection
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✅ Restructuring plans & out-of-court agreements
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✅ Creditor claims and enforcement