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 good news is that the law offers a tiered set of tools, and almost all of them work better the earlier they are triggered. Waiting until the last moment tends to narrow the options down to the worst of them.

The map, from least to most

• Notice of the opening of negotiations (pre-insolvency): it opens a window of protection against enforcement while negotiations with creditors take place.
• 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 before full insolvency is reached.
• 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 Act 16/2022, gaining a window of protection against enforcement 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. I map out the scenario, compare the available routes and act early, which is when the outcome can really be changed. You can read how I handle business matters or write to me for an initial assessment.

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