Our law firm in Marbella can answer all your questions about Spanish bankruptcy proceedings. First, it is important to note that Spanish law tries as much as possible to help individuals and companies that are going through complicated situations meet their payment obligations.
If it is foreseen that the Spanish bankruptcy procedure will take a long time, that is to say, that there is no short-term solution, a so-called creditors’ meeting will be requested. This enables a judge to intervene and assign an administrator to be in charge of mediating between a business and its creditors in order to find a solution to end the situation of the outstanding debts.
What is the aim of bankruptcy proceedings in Spain?
The creditors’ meeting is the tool to help, or at least to try to help, a company stay in business. A company with outstanding debts will search for ways to pay their creditors and it will try to stay viable.
How does the creditors’ meeting work?
To declare the creditors’ meeting, both individuals and companies must comply with several legal requirements demonstrating that the insolvency situation is real and that the company effectively cannot pay its debts.
Said request shall be done at the Mercantile Court in either of the two following ways:
- Voluntary request: done by the individual or company that is facing insolvency.
- Forced request: in this case, one of the creditors or the company’s shareholders is the requesting party.
It is the judge who decides whether or not to approve the request to declare bankruptcy. If yes, the creditors’ meeting will be published in the Official State Gazette (Boletín Oficial del Estado).
What happens if the request goes ahead?
If the creditors’ meeting is approved by a judge in Spain, then the period for the creditors to present the debts they have with the company will be initiated.
Once all proof has been presented, a judge will decide which debts will be admitted, given the information and proof that was presented during the aforesaid period.
The judge is also in charge of appointing an administrator who has to negotiate the final debt with the suppliers in order to achieve the final aim, which is to try to reach agreements for the terms of payment and even negotiating a “quita”, which is the reduction of the final sum that will be paid.
If an agreement is reached, a payment agreement for said debt will be signed, setting out the terms agreed upon. At this point, the company in insolvency may continue all of its normal business activities.
If your company is facing insolvency or if you are a creditor seeking payment, surely you would appreciate legal advice on the bankruptcy procedure. Therefore, do not hesitate to contact our law firm in Marbella. Welex: your English-speaking bankruptcy lawyers in Marbella.