Written by Josep Conesa
Employment and insolvency lawyer
To avoid a culpable insolvency classification, it is important to seek an agreement with creditors — that is, to initiate a pre-insolvency procedure and attempt to reach a creditor agreement.
Follow the link below for a full step-by-step guide to closing a company in Spain through an insolvency procedure:
Pre-insolvency creditor lawyers - Find all the information here
What happens when no agreement is reached in a pre-insolvency procedure?
In the case of a legal entity:
The insolvency mediator must immediately apply for the opening of consecutive insolvency proceedings in respect of an insolvent debtor in the following circumstances (art. 705 of the Insolvency Act):
- If, within 10 calendar days from the date on which the proposed agreement was sent, creditors representing at least a majority of the liabilities that could be affected by that agreement decide not to enter into or not to continue negotiations.
- If the proposed out-of-court payment agreement is not accepted by the creditors.
- If the out-of-court payment agreement is annulled by the court or breached by the debtor.
In the case of a natural person:
The notary or the insolvency mediator must, once two months have elapsed from the notification of the opening of negotiations with creditors, apply for the opening of consecutive insolvency proceedings within the following 10 days if they consider that reaching an agreement is no longer possible.
The applicant must accompany the application with an explanatory report setting out why agreement could not be reached.
Subsequent consecutive insolvency proceedings:
These will not be required if the debtor is not currently or imminently insolvent.
Application by the insolvency mediator:
- The application must be accompanied by a proposed arrangement with creditors or a liquidation plan.
- If the debtor is an individual who is not a business operator, the application must be accompanied by a plan for the liquidation of the active estate.
- The application must also include a report prepared by the insolvency mediator themselves:
- containing the content required for the report referred to in Title VI of Book I of this Act
- including an inventory of the active estate
- including the list of creditors
- including any other legally required documents.
- The mediator must set out whether the conditions for granting the discharge of unsatisfied liabilities are met and, if so, whether the qualification proceedings should be opened.
