The economic crisis created by Covid-19 has harmed the financial situation of Spanish limited companies, especially SMEs, severely affected by the disruption of their activity and the lack of liquidity. In many cases, this situation has led to solvency problems.
In this context, the capital increase through credit compensation represents a solution for capital companies with high liabilities, thus avoiding the risk of insolvency and the declaration of bankruptcy. Specifically, a capital increase through credit compensation.
The capital increase through credit compensation is regulated in Spain by Article 301 of the Real Legislative Decree 1/ 2010, of 2nd of July, approving the consolidated text of the Spanish Companies Act (TRLSC). It involves the increase of the company’s share capital by converting part of the company’s liabilities or debt into (new) shares of the creditors.
Depending on the type of company, a limited liability company or a public company, the steps and requirements to carry out a capital increase differ:
This article is not considered legal advice