When a company hits a crisis: pre-insolvency, insolvency and the insolvency administrator

Published on 23 June 2026

Few business decisions are as hard as acknowledging that the company is going through a crisis. The law does offer a tiered set of tools for this, and almost all of them pay off more the earlier they are triggered: waiting until the last moment tends to leave only the worst one on the table.

The map, from least to most

• Notice of the opening of negotiations (pre-insolvency): it opens a three-month window, extendable by a further three, that halts enforcement against the assets needed to keep the business running while negotiations with creditors take place. It does not reach public creditors in the same way (articles 600, 601, 605 and 607 of the consolidated text of the Insolvency Act).
• Restructuring plans: following the reform of the Insolvency Act (Act 16/2022 of 5 September), they allow the debt and the business to be reorganised. They are already available on the mere likelihood of insolvency (where it is foreseeable that obligations falling due over the next two years cannot be met) and also in imminent or actual insolvency, so long as no creditor-initiated insolvency petition has been admitted (articles 584 and 636 of the consolidated text of the Insolvency Act).
• Insolvency proceedings: when insolvency is already actual or imminent. They may be geared towards continuing the business or towards an orderly liquidation.

The role of the insolvency administrator

This is the figure who, appointed by the court, manages or supervises the business during the proceedings, draws up the report, sets the assets and liabilities, and takes part in the classification of the insolvency as fortuitous or culpable. For the debtor and its directors, a culpable classification can carry personal consequences, which is why documenting due diligence well in advance matters.

A practical example

Take a company with increasingly tight cash flow that starts falling behind on payments. If it reacts in time, it can resort to the notice of the opening of negotiations (pre-insolvency) and work on a restructuring plan with its creditors under Book Two of the consolidated text of the Insolvency Act, as worded by Act 16/2022, gaining that window of protection while it negotiates.

If, on the other hand, it runs the cash dry, keeps taking on debt it cannot pay and only goes to court when there is no margin left, the likely scenario is insolvency, with fewer options and the added risk that the conduct will be examined in the classification or even in the criminal courts. The same problem, addressed six months earlier, usually has a very different way out.

The connection with criminal law

A business crisis often borders on criminal law: concealment of assets, frustration of enforcement or punishable insolvency. Bearing this in mind from the outset avoids greater harm, and it is one of the advantages of a firm that also handles white-collar crime.

How I approach it

My approach here is one thing: anticipate. The first thing I look at is the real cash position and the schedule of upcoming payments, because that is where the answer to what actually matters lies: how much room is left and which route (pre-insolvency, restructuring or insolvency proceedings) fits the case. Once that is settled, I compare the timing of each option and act early, which is when the outcome can still be changed. If your company is at that point, write to me: the first thing I will ask for is exactly that payment schedule.

Editorial responsibility: Carles Jiménez, attorney-at-law (Barcelona Bar No. 34.946). This note was prepared with the assistance of artificial-intelligence tools and reviewed and approved by the author before publication.

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