Business law · Sub-area
When financial pressure builds, from pre-insolvency to insolvency: the sooner you act, the more options remain on the table.
Acknowledging that the company is in difficulty is one of the hardest decisions, and it is almost always made late. The law offers a tiered set of tools, and almost all of them work better the earlier they are used. We support the company and its directors along that path, from the first cash-flow warning to insolvency, dealing directly with the lawyer.
It is a field that connects with business law and, more often than it seems, with white-collar crime: punishable insolvency is only a step away. You can also read our note on a company in crisis.
The notice of the opening of negotiations opens a window of protection against enforcement while terms are negotiated, and restructuring plans (article 614 of the consolidated Insolvency Act) allow the debt to be reordered before full insolvency. This is the ground reinforced by Act 16/2022.
When insolvency is already actual or imminent (article 2 of the consolidated Insolvency Act), the proceedings can be geared towards continuing the business or towards an orderly liquidation (declaration, article 28).
The insolvency is classified as culpable where wilful misconduct or gross negligence has contributed to creating or worsening it (article 442). A culpable classification can carry personal consequences for the directors: hence the importance of documenting due diligence well in advance.
The discharge of unsatisfied debts (article 486 of the consolidated Insolvency Act) allows a good-faith debtor to be released from debts they have been unable to pay. A key mechanism for individuals and the self-employed.
We support the director in managing the crisis and watch the line with criminal law (concealment of assets, frustration of enforcement), which in these matters is never far away.
My approach here is one thing: anticipate. The sooner the scenario is mapped out, the more routes stay open. I analyse the cash-flow and balance-sheet position, compare the available tools (pre-insolvency, restructuring, insolvency) and draw up a plan before the calendar imposes one.
Every citation is checked against its official source and I verify the applicable wording, because Spain's insolvency law has changed a great deal in a few years. I do not promise outcomes: I offer an honest assessment of the options and their risks, and coordination with the criminal-law area where needed.
Discover my methodTell us about your situation and we will tell you, frankly, how we can help.
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