The Bill of Exchange Procedure
To initiate proceedings, the claim must be filed together with a bill of exchange, cheque or promissory note meeting the requirements of the Bills of Exchange and Cheques Act.
The Court of First Instance in the defendant's place of domicile will have jurisdiction over bill of exchange proceedings.
Once the claim is admitted, the Court will order the debtor to make payment within 10 working days and will immediately order the preventive attachment of the debtor's assets for the amount stated in the enforcement instrument, plus an additional sum to cover late-payment interest, expenses and costs, in the event that the payment demand goes unheeded.
If payment is made, the debtor will nonetheless remain liable for costs.
Should the debtor appear within five days of the payment demand and categorically deny the authenticity of their signature or allege a complete absence of authority to act, the court may, having regard to the circumstances of the case and the documentation submitted, lift any attachments that have been ordered, and may, if it considers it appropriate, require adequate security or guarantee to be provided.
However, the attachment will not be lifted in the following cases:
- Where the drawing, acceptance, guarantee or endorsement was certified, with the date noted, by a registered commercial broker, or where the respective signatures have been authenticated on the instrument itself by a notary.
- Where the debtor, during the protest or notarial payment demand, did not categorically deny the authenticity of their signature on the instrument or did not allege a complete absence of authority to act.
- Where the party liable under the instrument has acknowledged their signature before a court or in a public document.
Without prejudice to the foregoing, within ten days of the payment demand the debtor may file a claim of opposition, in which case the creditor will be given 10 days to contest it; a hearing may be held if requested by the parties, which will follow the procedure of an oral hearing.
The opposition must be submitted in the form of a claim. Within ten days, the court will issue a ruling resolving the opposition. If the opposition is dismissed and the ruling is appealed, it will be provisionally enforceable in accordance with this Act.
If no opposition is filed, the Court will proceed with enforcement for the amounts claimed.
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Monetary enforcement
Monetary enforcement takes place when an enforcement claim is filed requesting the opening of enforcement proceedings in respect of a monetary debt evidenced by an enforcement title, whether judicial or otherwise.
Enforcement proceedings shall be opened for the amount claimed in the enforcement claim by way of principal and accrued ordinary and default interest, increased by a provisional sum to cover any interest that may accrue during the enforcement process and the associated costs. This provisional sum — which is set on a preliminary basis — may not exceed 30% of the amount claimed in the enforcement claim, without prejudice to subsequent final calculation.
The enforcement order shall not include a payment demand addressed to the debtor where the enforcement title consists of resolutions issued by the Court Administrator (Letrado de la Administración de Justicia), judicial or arbitral decisions, or decisions approving settlements or agreements reached in the course of proceedings, or mediation agreements, all of which require the payment of specified sums of money. In such cases, the debtor's assets may be seized directly.
Conversely, where enforcement proceedings for the payment of specified sums of money are not based on procedural or arbitral resolutions, the enforcement order shall include a payment demand addressed to the judgment debtor for the amount claimed by way of principal and any accrued interest up to the date of the claim. If payment is not made immediately, the Court shall proceed to seize the debtor's assets to the extent necessary to satisfy the amount for which enforcement has been ordered, together with costs. This applies unless the enforcement claim was accompanied by a notarial record certifying that a payment demand had been served on the judgment debtor at least ten days in advance.
If the judgment debtor makes payment at the time of the payment demand or before the enforcement order is issued, the Court Administrator shall place the corresponding sum at the disposal of the judgment creditor and shall issue the judgment debtor with proof of payment. Costs shall be borne by the debtor, unless the debtor can demonstrate that, for reasons beyond their control, payment could not be made before the creditor initiated enforcement proceedings.
Once interest and costs, if any have accrued, have been satisfied, the Court Clerk will issue a decree declaring the enforcement proceedings closed.
If payment is not made, once enforcement has been ordered, the debtor's assets will be seized.
Unless the enforcing party identifies assets whose seizure it considers sufficient for the purposes of enforcement, the Court Clerk will require the debtor to declare assets and rights sufficient to cover the amount of the enforcement order, specifying any charges and encumbrances, and — in the case of immovable property — whether it is occupied, by whom, and on what legal basis.
At the request of an enforcing party who is unable to identify sufficient assets belonging to the debtor, the Court Clerk will issue a procedural order directing financial institutions, public bodies and registers, and any natural or legal persons indicated by the enforcing party to provide details of the debtor's assets or rights of which they are aware. When making such requests, the enforcing party must briefly state the reasons why it believes the institution, body, register, or person in question holds information about the debtor's assets. Where the enforcing party so requests and at its own expense, its court-appointed representative (procurador) may assist in processing the official communications issued for this purpose and receive responses to them, without prejudice to the provisions of paragraph 1 of the following article.
The Court Clerk will not request information from public bodies or registers where the enforcing party could obtain it directly, or through its duly authorised procurador.
The seizure of assets will be carried out in accordance with a set of rules. Unless the creditor and debtor have agreed otherwise — whether within or outside the enforcement proceedings — the Court Clerk responsible for enforcement will seize the debtor's assets, giving due consideration to the ease with which they may be realised and the least burdensome manner of doing so for the debtor.
If the circumstances of the enforcement make it impossible or very difficult to apply the above criteria, assets will be seized in the following order of priority:
1. Cash and bank accounts of any kind.
2. Credits and rights realisable immediately or in the short term, and securities or other financial instruments admitted to trading on an official secondary securities market.
3. Jewellery and works of art.
4. Income in cash, regardless of its origin or the basis on which it accrues.
5. Interest, income, and proceeds of every kind.
6. Movable property and livestock, shares, securities or instruments not admitted to official listing, and company shareholdings.
7. Immovable property.
8. Wages, salaries, pensions, and income derived from independent professional or commercial activities.
9. Credits, rights, and assets realisable in the medium to long term.
A court may also order the seizure of entire businesses where, taking all circumstances into account, this is preferable to seizing their individual assets.
The following assets are absolutely exempt from seizure:
1. Assets that have been declared non-transferable.
2. Accessory rights that cannot be transferred independently of the principal right.
3. Assets that have no patrimonial value in themselves.
4. Assets expressly declared exempt from seizure by any legal provision.
The following are also exempt from seizure:
1. Household furniture and furnishings, as well as the clothing of the judgment debtor and their family, to the extent that these cannot be considered superfluous. More generally, items such as food, fuel, and other goods which, in the court's view, are essential for the judgment debtor and their dependants to maintain a reasonable standard of living.
2. Books and instruments necessary for the practice of the profession, trade, or craft of the judgment debtor, provided their value is not disproportionate to the amount of the debt claimed.
3. Sacred objects and those used in the worship of legally registered religions.
4. Sums expressly declared exempt from seizure by law.
5. Assets and sums declared exempt from seizure by treaties ratified by Spain.
The following are likewise exempt from seizure:
1. salary, wages, pension, remuneration, or equivalent income that does not exceed the amount of the Spanish national minimum wage.
2. Wages, salaries, daily earnings, remuneration, or pensions exceeding the national minimum wage shall be subject to seizure according to the following scale:
1. For the first additional amount up to the equivalent of twice the national minimum wage: 30%.
2. For the additional amount up to the equivalent of a third national minimum wage: 50%.
3. For the additional amount up to the equivalent of a fourth national minimum wage: 60%.
4. For the additional amount up to the equivalent of a fifth national minimum wage: 75%.
5. For any amount exceeding the above: 90%.
Where the judgment debtor receives more than one source of income, all such income shall be aggregated and the exempt portion deducted only once. Similarly, the wages, salaries, pensions, remuneration, or equivalent income of spouses shall be aggregated where the matrimonial property regime governing them is not one of separation of assets and income of any kind — a circumstance they must prove to the Court Registrar (Letrado de la Administración de Justicia).
Taking into account the judgment debtor's family responsibilities, the Court Registrar may reduce by between 10% and 15% the percentages set out in points 1, 2, 3, and 4 of section 2 above.
However, the above shall not apply where enforcement proceedings are brought on the basis of a ruling ordering the payment of maintenance, in all cases where the obligation to pay maintenance arises directly from the law — including provisions in judgments given in nullity, separation, or divorce proceedings concerning maintenance owed to a spouse or children, or in court decrees or notarial deeds formalising a regulatory agreement establishing such payments. In these cases, and in corresponding interim measures, the court shall determine the amount that may be seized.
HOW INVOLUNTARY INSOLVENCY PROCEEDINGS WORK
Your company may also initiate involuntary insolvency proceedings in order to gain priority in recovering payment.
The law rewards the party that initiates involuntary insolvency proceedings with a preferential right to collect 50% of the debt (provided the claims are not subordinated claims).
If insolvency proceedings are declared, costs and expenses incurred by that party are also accrued in their favour as claims against the insolvency estate.
Risks of filing an involuntary insolvency claim:
To deter reckless applications, a party whose involuntary insolvency claim is dismissed may be ordered to pay procedural costs and any damages caused. Such costs may not be imposed where:
- Despite the dismissal of the application, the applicant can demonstrate that the grounds on which it was based were reasonable.
- Insolvency is sought in respect of companies within a group and only some of those companies are actually insolvent.
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