Financial difficulties can happen even to well-managed businesses. If your company in Spain is unable to meet its obligations, it’s important to understand the available insolvency and bankruptcy procedures to protect your interests and comply with the law.
This article provides a practical overview of bankruptcy laws in Spain and what businesses should do if they face insolvency.
🏛️ Legal Framework
Spain’s bankruptcy process is governed by:
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Ley Concursal (Spanish Insolvency Law)
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Commercial Courts (Juzgados de lo Mercantil)
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EU insolvency regulation for cross-border cases
🚨 When Is a Company Insolvent?
A company is considered insolvent when:
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It cannot meet its current financial obligations, and
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There is no foreseeable liquidity in the near future
Spanish law requires directors to declare insolvency within 2 months of identifying the financial distress.
🧾 Types of Insolvency Proceedings
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Voluntary Insolvency (Concurso Voluntario):
Initiated by the company itself when facing insolvency. -
Involuntary Insolvency (Concurso Necesario):
Filed by a creditor or legal authority when the company fails to pay.
🔄 Restructuring vs. Liquidation
✅ Pre-Pack or Early Restructuring
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Allows companies to negotiate debt restructuring with creditors
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Court-supervised or pre-court “restructuring plan” possible
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Designed to save viable businesses
❌ Liquidation
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Assets are sold to pay creditors
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Company ceases operations and is struck off the registry
👨⚖️ The Insolvency Process
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File insolvency petition at the commercial court
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Appointment of an insolvency administrator
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Suspension of lawsuits and enforcement actions
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Creditor list published
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Negotiation or liquidation phase begins
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Court decision finalizes process
🛑 Director Liability
If directors delay filing, engage in wrongful trading, or commit negligence:
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They may be personally liable for company debts
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Can be banned from managing companies for up to 15 years
📄 Alternatives to Bankruptcy
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Private refinancing agreements
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Out-of-court settlements with major creditors
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Asset sales to regain liquidity
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Business transfers or M&A rescue options
🤝 How Borderless Lawyers Can Help
We assist businesses with:
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Assessing insolvency risk and options
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Filing for voluntary insolvency
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Representing creditors in bankruptcy cases
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Negotiating restructuring plans or asset sales
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Director liability defense