Ley Concursal (Ley 22/2003, de 9 de julio 2003); Ley de medidas urgentes en materia concursal (Ley 9/2015, de 25 de mayo de 2015)
Insolvency Law (Law 22/2003 of 9 July 2003); Law on urgent measures on insolvency proceeding (Law 9/2015 of 25 May 2015)
A company or an individual person may apply for insolvency procedures before reaching the stage of insolvency (concurso voluntario). If the company is already insolvent the procedure before the court can be started by the company, a creditor or a shareholder (concurso necesario).
The court responsible for the judgement is the court of the district (juzgado mercantil) where the debtor is registered (not applicable if the debtor has moved its residency/registration in the previous 6 months). A company must file for insolvency within two months from reaching insolvency, i.e. not being able to pay.
The company must present a set of documents to the court:
- declaration stating that the claimant has the right to appeal to the court;
- balance sheets and financial report;
- inventory of the debtor’s assets;
- a list of the creditors.
Once the procedure is open, the judge appoints an administrator who must ensure collaboration with the judge, protection of the creditors' interests and, where possible, the return of the company to a normal activity regime.
There are two possible solutions to an insolvency procedure, that is agreement or liquidation. If the company reaches an agreement with the creditors, the debt reduction must be no more than 50% and the timeline no longer than 5 years. If the agreement is not fulfilled, the company can be wound up. The second solution is liquidation which may imply sale of assets, winding up or acquisition.
The insolvency declaration must be published in the Official State Journal (Boletín Oficial del Estado) and registered with the Registry for Insolvency Procedures (Registro de Procedimientos de Insolvencia).
The Insolvency Law (Law 22/2003 of 9 July 2003) was reformed in 2015 (Law 9/2015), introducing clauses aiming to make the transmission of the business activity, or part of it, of the company that is under insolvency procedure more flexible. The goal of this is to facilitate that viable companies can maintain their activity or at least some sections, after the insolvency agreement.
In 2016, there were 4,080 companies applying for insolvency procedures. This means a drop of 20% compared to 2015. Moreover, it is the lowest figure recorded since the onset of the crisis in 2008. Some experts note that the causes behind insolvency procedures have recently changed. While during the crisis these were mostly associated with the construction crisis and the lack of loans provided by the financial institutions, recently they are more closely linked to the business evolution (competence among companies, lack of innovation of the products, etc.).
The number of companies in undergoung insolvency in 2017 was 4,261, while in 2018 it was 4,332.
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Involved actors other than national government