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

Published on June 23rd, 2026

Few business decisions are as hard as saying out loud that the company is in trouble. The law has a tiered set of tools for exactly that moment, and almost all of them pay off more the earlier they are triggered, while 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 September 5th), they allow the debt and the business to be reorganized. 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 toward continuing the business or toward an orderly liquidation.

If the company is a micro-enterprise (fewer than ten employees and annual turnover below €700,000 or liabilities below €350,000), these tools give way to the special procedure for micro-enterprises (articles 1.2, 583.4 and 685 of the consolidated Insolvency Act).

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.

Six months earlier, or too late

If a company with increasingly tight cash flow that starts falling behind on payments 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 instead 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 border with criminal law

A business crisis often borders on criminal law: concealment of assets, frustration of enforcement or punishable insolvency. Bearing that in mind from the outset avoids greater harm, and that is why I also work in white-collar crime.

How I approach it

My approach here comes down to anticipating, starting with the real cash position and the schedule of upcoming payments, which is where I find out 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, and I will start from that same payment schedule. Where a director's own exposure begins is covered in the criminal liability of directors.

Editorial responsibility: Carles Jiménez, Spanish lawyer (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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