The communication of the opening of negotiations with creditors allows companies the possibility to negotiate with their creditors in a safe and regulated framework, avoiding the risk of individual enforcement actions and gaining time to reach restructuring agreements. While this pre-insolvency mechanism does necessarily involve declaring insolvency, it activates immediate legal protection that allows the company to reorganise its financial situation and prevent judicial measures that could jeopardise its operations.
Procedure before the competent court
The communication of the opening of negotiations with creditors begins with the submission of a written application signed by the debtor or their legal representatives to the competent Commercial Court. This document states the intention to start negotiations with creditors and their purpose.
The minimum content of the communication must include:
- The reasons that justify the communication request, as well as the debtor’s financial status.
- Information about the company’s activity, including assets and liabilities, turnover, and number of employees.
- A list of creditors with whom negotiations have begun or are expected to start, including the amount of their claims and the total liabilities.
- Assets, rights, or contracts necessary for the continuation of the business activity.
- If the restructuring plan affects public credit, proof of compliance with tax and social security obligations is required.
It is advisable to attach a preliminary viability plan or a tentative timetable of the negotiation phases to reinforce credibility before the court and creditors.
The submission of this document does not require prior approval from the judge; the court issues an order that gives publicity to the communication and determines the start of the time limit. From that moment, the protective effects take effect automatically, including the suspension of enforcement proceedings and the prevention of compulsory insolvency proceedings.
Initial duration
One of the most relevant aspects for any company, especially for international businesses with multiple creditors in different jurisdictions, is the time available to reach an agreement.
The effects last for a period of three months from the date of the court filing.
Can this period be extended?
Yes, a single three-month extension may be requested, but the request must be filed expressly before the initial period ends. The company must submit a reasoned request, proving that negotiations are progressing effectively and that there is a real prospect of success.
Therefore, the maximum total period is six months (three initial plus three by extension). After this time, if the company has not reached a restructuring plan or another pre-insolvency solution and the insolvency situation continues, the company must file for voluntary insolvency within one month.
Conclusion
The communication of the opening of negotiations with creditors is not a mere formality, but a strategic tool that, if properly managed, can make the difference between business continuity and liquidation. A frequent mistake is exceeding the deadlines without having properly prepared the documentation or defined clear negotiation strategies, which reduces the chances of success.
With a maximum period of six months and the need to prove the veracity of the negotiations, it is necessary to rely on specialised legal advice to optimise deadlines and coordinate restructuring across all jurisdictions where the company operates.
If you need legal advice on the communication of the opening of negotiations with creditors,
