Client or supplier insolvency is an increasingly common risk in Spain and can seriously affect business continuity. This guide outlines early warning signs, legal remedies and preventive measures to protect companies facing insolvency scenarios.
When dissolving a company in Spain, shareholders may choose to receive assets instead of cash through an in-kind liquidation share. This legal mechanism, regulated by the Spanish Companies Act, offers a flexible and tax-efficient way to close a business while preserving valuable assets. Discover its key legal requirements, main advantages, and the precautions to take for a smooth and equitable dissolution process.
A company faces legal grounds for dissolution in Spain when its net assets fall below half of its share capital. Fortunately, the Spanish Companies Act provides several legal mechanisms to restore financial balance and avoid liquidation, allowing businesses to continue operating.
The communication of the opening of negotiations with creditors is a pre-insolvency mechanism that begins with a written submission to the Commercial Court. It does not require prior approval and immediately triggers the suspension of enforcement actions. Its duration is three months, extendable by up to an additional three months.
The communication of the opening of negotiations allows the debtor to gain time to reach a restructuring plan with its creditors, avoiding the need to file for insolvency proceedings. For three months, the obligation to file for insolvency proceedings and to dissolve the company due to losses is inactive.
The assignment of credits is a valid and widely used legal mechanism in Spain through which a creditor (assignor) transfers to a third party (assignee) a credit right it holds against a specific debtor (assigned debtor).
Spanish law offers guarantees for loans, establishing the precedence of creditor payments in insolvency cases. Secured guarantees, such as mortgages, ensure preferential payment through asset enforcement, improving credit recovery in financial distress.
In Spain, the sale of productive units within the framework of insolvency proceedings is subject to a specific legal regime. This sale ensures the continuity of business activities and the job security of the company’s employees. For investors, purchasing these units presents an attractive opportunity to develop economic activities.
Challenging the list of creditors refers to the legal process of questioning or contesting the inclusion or exclusion of specific creditors in a compiled list within an insolvency proceeding or arrangement with creditors. It allows parties, such as creditors, to dispute the accuracy, legitimacy, or completeness of the creditor list submitted by the debtor or the insolvency administration.
When debtors have vanished without a trace, it is imperative to adhere to legal protocols to ascertain their whereabouts. Within this article, we present a comprehensive guide to lawfully discovering the location of a debtor.
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