Before addressing the advantages of pre-insolvency versus insolvency proceedings, it is worth recalling the objectives of this legal alternative.Objectives of the pre-insolvencyReduce the possibilities of eventual personal liability of the business ownerAvoid the declaration of bankruptcy of the company at the request of a creditor for 4 monthsRefinance the debtPrepare for insolvency proceedings by negotiating an early settlement proposal with creditors, which will shorten and simplify the proceedingsAvoid the initiation or suspension of judicial or extrajudicial executions against assets or rights necessary for the continuity of the business, or against other assets (with the support of at least 51% of financial creditors)Suspend foreclosures temporarilyAdvantages of the pre-insolvencyThe pre-insolvency is a legal mechanism that offers the following benefits:Maintains the work routineInsolvency administrators do not intervene in the company, as with bankruptcy proceedings. The company keeps its governing bodies and be responsible for all executive decisions during the time of the proceeding.Avoids bad ratingsCompanies in pre-insolvency proceedings enjoy protection against creditors’ applications of insolvency proceedings.Stops executionsFrom the time of submission of the communication, the judicial enforcement of property or rights that are “necessary for the continuation of the professional activity” will not be possible.Does not affect the image of the companyCompanies in pre-insolvency have some privacy regarding the process. Although the court secretary can order the publication of the extract from the resolution in the Insolvency Register, if the debtor expressly requests it, it will not be made public. The debtor may subsequently request to reverse the confidentiality of the communication.It is economicalPre-insolvency costs are usually lower than bankruptcy proceedings because their duration is shorter and limited in time. There are no bankruptcy administrators, and the fees for legal counsel and lawyers are inferior.Most companies that apply for bankruptcy proceedings do so when there is no longer any possibility of reversing their situation. However, early restructuring strategy tools can help them overcome a short-term insolvency situation if implemented in time.Finally, once the pre-insolvency notice is declared, the company cannot issue another one within a year.See infographicFor additional information regarding the advantages of pre-insolvency proceedings in Spain,