Insolvency or bankruptcy, take place when a company fail to pay their debts. Insolvency declaration leads to a bankruptcy proceeding. Corporate restructuring takes place when a company encounters a difficult situation and management decides to change the outer and inner structure and direction of the company.

Liquidity solutions for companies

Liquidity Solutions for Companies in Spain as a result of the State of Alarm

Following the decree of the State of Alarm, the Spanish Government has approved a package of measures on labour Law (by easing the suspension of employment contracts) and insolvency Law, in order that companies can better cope with their lack of liquidity.

How to apply for bankruptcy proceedings

How to apply for bankruptcy proceedings in Spain

Royal Decree-Law 8/2020 introduces changes to the deadlines for applying for bankruptcy proceedings in Spain, whether voluntary or necessary. It also empowers the judges to reject applications, up to two months after the end of the state of alarm.

Directors’ Liabilities during the state of alarm

Director’s Liabilities during the State of Alarm

Royal Decree-Law 8/2020 amends certain obligations of company directors when there is a legal or statutory cause for dissolution or if the company finds itself in a state of insolvency.

Insolvency measures of RDL 162020

Informative note on Insolvency Measures – RDL 16/2020

Informative note on the Royal Decree-Law 16/2020, of 28th April, regarding procedural and organisational measures to deal with Covid-19, especially concerning measures on insolvency proceedings.

Closing a Subsidiary in Spain

Closing a Subsidiary in Spain: With or Without Bankruptcy Proceedings?

When partners of a subsidiary in Spain decide its closing due to economic reasons, the question arises as to how to do it. Depending on each specific case, the company may be dissolved and liquidated with or without bankruptcy proceedings.

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Unsuccessful enforcement by the creditor as a basis for the necessary bankruptcy application

Unsuccessful enforcement by the creditor implies the existence of a title by which enforcement has been effected, without sequestration resulting in sufficient unencumbered assets for the payment of the outstanding credit.

Court approval of refinancing agreements in Spain

The majority of Spanish bankruptcy proceedings end in favor of the debtor. The preliminary phases aim to achieve continuity of businesses that are in critical financial situations. Judicial approval is tantamount to a quasi-automatic resolution of a refinancing agreement, which put minority dissenting creditors at major disadvantages.

Legal framework for restructuring and insolvency proceedings in Spain

The legal framework for restructuring and insolvency proceedings governs the reorganization of debt. An insolvency proceeding is an in-court-restructuring procedure that consists of obtaining an insolvency order from a judge. An out-of-court restructuring is where a debtor negotiates directly with its creditors.

Out-of-Court Restructuring in Spain

In 2014, the Spanish government implemented the out-of-court restructuring procedure through the Royal Decree Law. Its objective is to help debtors avoid bankruptcy by negotiating with their creditors. Given the time and effort it takes, an out-of-court restructuring can be very favourable to both parties.

Developments in the legal framework of restructuring and insolvency proceedings in Spain

By the introduction of a new law, the Spanish legal framework on restructuring and insolvency proceedings is more adjustable to a debtor facing bankruptcy. Still, the difficulty of implementing a complete legal framework lies in covering all possible situations of insolvency.