Insolvency Procedure in SpainUpdated on Tuesday 14th February 2017
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Insolvency is a legal procedure that must be performed when a company is experiencing financial difficulties or it needs to be restructured, as a direct consequence of the current financial situation. The legal system in Spain provides a specific process, which is started by filing a petition at the Spanish Commercial Court. Our team of lawyers in Spain can assist foreign businessmen in completing the compulsory steps required for this procedure, as prescribed by the Spanish Insolvency Act.
Insolvency regulations in Spain
It is important to know that the Spanish Insolvency Act establishes several pre-insolvency measures. During these procedures, the parties can establish refinancing agreements, as well as payment agreements which do not require the intervention of a Spanish court.
In Spain, insolvency proceedings are applied in the same manner, regardless of the company type, and our team of attorneys in Spain can offer more information in this sense.
If the insolvency procedure will be handled through a court in Spain, the judge will appoint an insolvency officer, who will verify the debtor’s current assets and debts, as well as the company’s management.
The officer will write a report, which will lead to two main possibilities. A Composition Agreement will be established between the parties, allowing the debtor to restructure the company. The other option refers to the liquidation procedure, in which the debtor’s assets (including the company) can be wind up.
Important aspects related to insolvency in Spain
The Spanish Insolvency Act stipulates that the procedure is applied for both natural persons and legal entities following the same regulations. However, it is necessary to mention that the insolvency regulations do not take into consideration public entities, as they can’t become bankrupt.
Businessmen who are interested in opening a company in Spain in the financial sector must know that special provisions are applied if such entities may enter the insolvency procedure.
Insolvency procedures in Spain can be initiated on a voluntary basis or a compulsory one, in which case the creditor will initiate the petition at the Commercial Court.
We invite businessmen to contact our law firm in Spain for legal representation during an insolvency procedure.