Insolvency Proceedings in Spain in 2026
Area: Commercial law and business restructuring
Reader: company or self-employed professional in financial difficulty / creditor
Sources reviewed: Spanish Insolvency Act (RDL 1/2020), Law 16/2022 and the Public Insolvency Registry
Insolvency proceedings have become a common phrase in business conversation in recent years, especially after the liquidity strains left by the pandemic, rising interest rates, and the increased cost of energy and raw materials. Many companies that were profitable until recently have had to rethink their viability, and in that context it is important to draw a precise line between a simple temporary cash-flow strain and a real insolvency that requires activating legal mechanisms.
The reference legal framework is the consolidated text of the Spanish Insolvency Act, approved by Royal Legislative Decree 1/2020 and substantially amended by Law 16/2022, which introduced significant changes such as pre-insolvency restructuring plans and the special procedure for microenterprises. Knowing these changes matters because, unlike a few years ago, there are now more tools available to intervene before reaching formal insolvency proceedings, and using them in time often makes the difference between saving the company and liquidating it.
Throughout this article we will review what insolvency proceedings are and when they must be filed, the different types of procedure, the stages they go through, the role of the insolvency administration, the consequences for partners, directors and creditors, and the most common mistakes that worsen a situation that, when managed in time, usually has reasonable solutions.
What insolvency proceedings are and when they must be filed
Insolvency proceedings (concurso de acreedores) are the judicial procedure provided for managing, in an orderly way, the insolvency of an individual or legal entity that cannot regularly meet its payment obligations. Their purpose is not merely to liquidate the debtor’s assets, but to attempt, whenever there is room to do so, an agreement with creditors that allows the business to continue operating.
The law distinguishes two situations that require considering insolvency proceedings: current insolvency, when the debtor can no longer regularly meet its due obligations, and imminent insolvency, when the debtor anticipates that it will not be able to meet them punctually in the near future. This second scenario is especially relevant because it allows action to be taken before the situation worsens, which in practice greatly reduces the risk of the proceedings ending with a finding of fault.
The duty to file for insolvency proceedings falls on the debtor itself and carries a specific deadline: it must be filed within two months of the date on which the debtor became aware, or should have become aware, of its state of insolvency. Missing that deadline without acting not only worsens the economic situation but also has direct legal consequences for directors’ liability, as explained further below.
Failing to file for insolvency proceedings in time is usually, in practice, the first link in a chain that ends up making the outcome much more complicated. Before reaching that point, it is worth knowing the options the legal system offers in the area of restructuring and business crises, which includes pre-insolvency mechanisms designed precisely to get ahead of current insolvency.
Types of proceedings: voluntary, mandatory and expedited
Not all insolvency proceedings begin the same way or follow the same pace. The law distinguishes several forms depending on who files them and how complex the case is.
Voluntary insolvency proceedings are those filed by the debtor itself, within the two-month period from becoming aware of its current or imminent insolvency. This is the most common route and, generally, the most favourable one, because it allows the debtor to retain more room to act during the initial stage and demonstrates diligent conduct before the courts, a factor that is viewed positively if the debtor’s conduct is analysed later on.
Mandatory insolvency proceedings, on the other hand, are filed by one or more creditors when the debtor has not acted on its own despite being insolvent. In these cases, the debtor loses part of its procedural initiative and usually starts from a weaker position, since the court will examine in more detail whether there was passivity or an attempt to conceal the situation. For a creditor, filing for mandatory proceedings can be the only reasonable path when it has spent months trying to collect without success and detects clear signs of insolvency in its debtor.
Alongside these two classic forms, the 2022 reform introduced the special procedure for microenterprises, a simplified and faster route designed for small businesses (in terms of employees and turnover) that has in practice replaced the former “expedited proceedings” in most cases. This procedure reduces formalities and deadlines, and offers continuation or liquidation alternatives adapted to small business structures, which make up the majority of Spain’s productive fabric.
Choosing the right route correctly — and, above all, assessing whether it is worth exploring a restructuring plan first — is one of the decisions where specialised advice makes the biggest difference, especially when the company still has assets and some room for negotiation.
Stages of the procedure and the role of the insolvency administration
The stages of insolvency proceedings follow a relatively predictable sequence, although their duration varies greatly depending on the complexity of the case, the number of creditors, and whether or not an agreement is reached.
The first stage is filing and declaration of insolvency. The competent commercial court examines the documentation submitted (balance sheet, inventory of assets, list of creditors, among others) and issues the order declaring insolvency, which marks the formal start of the procedure and produces immediate effects, such as the suspension of certain individual enforcement actions against the debtor.
Next, the common stage opens, in which the estate’s assets (the debtor’s property and rights) and the estate’s liabilities (the list of creditors and their claims) are established. At this point the insolvency administration is appointed, a body normally made up of an economist, lawyer or auditor experienced in the field, which takes on key functions: it intervenes in, or in some cases replaces, the debtor’s powers over its assets, draws up the inventory of assets and rights, prepares the list of creditors, and issues a detailed report on the causes of the insolvency. This report is decisive, because it largely forms the basis for the later finding on the nature of the proceedings.
| Stage | What happens |
|---|---|
| Filing and declaration | The court issues the order declaring insolvency and suspends individual enforcement actions. |
| Common stage | The estate’s assets and liabilities are established; the insolvency administration is appointed. |
| Composition agreement or liquidation | A viable payment proposal is approved, or the assets are liquidated to pay creditors. |
Once the common stage closes, the procedure branches into the composition agreement stage or the liquidation stage. In the composition agreement stage, the debtor proposes a payment plan to creditors (with debt write-offs, extended terms, or both) which, if approved by the legally required majorities, allows the business to continue under renegotiated payment terms. If no agreement is reached, or if the debtor shows no signs of viability, the proceedings move into the liquidation stage, in which the assets are sold in an orderly manner to satisfy creditors according to the legal order of priority.
Understanding this sequence well, and the role played by the insolvency administration at each stage, is essential for making informed decisions, something that can be supported by prior analysis of insolvency structuring even before the formal declaration of insolvency.
Consequences for partners, directors and creditors
Insolvency proceedings do not affect all parties involved equally, and it is worth drawing a clear distinction between what happens in each case.
For partners, the most common consequence when the proceedings end in liquidation is the dilution or extinction of their stake in the company, since the remaining assets are used primarily to satisfy creditors before returning any value to the partners. When a viable composition agreement is reached, on the other hand, the company can continue operating, although often under renegotiated terms that also affect its capital structure.
For directors, the consequences can be much more severe if the proceedings are found culpable, that is, when wilful misconduct or gross negligence is found in causing or worsening the insolvency (for example, unjustifiably delaying the filing for insolvency, keeping irregular accounts, or carrying out acts that harm creditors). In these cases, directors can be disqualified from managing others’ assets for a set period and, in the most serious cases, ordered to cover part of the insolvency shortfall with their own assets — that is, the difference between assets and liabilities that is not covered by the company’s own property.
For creditors, the proceedings mean being placed within an ordered pool of liabilities according to legal categories: preferential claims (backed by a security interest or legal preference, such as certain employment or tax claims), ordinary claims (the bulk of commercial claims without special guarantee) and subordinated claims (relegated to last place in the payment order, such as those held by parties specially related to the debtor). This classification determines the order — and, in many cases, the actual proportion of recovery — each creditor will receive, so understanding which category a claim falls into is essential before deciding what position to take in the proceedings.
Important nuance: the payment order of the estate’s liabilities (preferential, ordinary and subordinated) determines in practice what percentage each creditor will actually recover, so it is worth analysing the classification of your own claim from the start of the procedure, not once liquidation is already underway.
When insolvency leads to a scenario of ceasing operations with no possibility of continuity, it is also worth knowing the implications of dissolution and liquidation of the company, which is sometimes considered as an alternative or as a step following the insolvency proceedings themselves.
Common mistakes that worsen a company’s situation
Experience in insolvency proceedings shows that much of the damage suffered by companies and creditors comes not so much from the insolvency itself, but from decisions taken — or not taken — in the months beforehand.
- Filing for insolvency too late. When cash reserves are already exhausted and there are not even enough assets left to cover the costs of the procedure itself (so-called “assetless” proceedings), the real options for continuity are significantly reduced and the risk of the proceedings being found culpable increases.
- Failing to properly distinguish between real insolvency and simple cash-flow strain. Not every temporary liquidity difficulty amounts to current or imminent insolvency in the legal sense, and confusing the two concepts can lead to triggering (or avoiding) the proceedings at the wrong moment.
- Not exploring pre-insolvency mechanisms first. Tools such as the communication of the opening of negotiations with creditors or the restructuring plans under Law 16/2022 allow debt to be renegotiated without needing to reach formal insolvency proceedings, and they offer more room the earlier they are activated.
- Not seeking specialised advice from the first sign of difficulty. This cross-cutting mistake tends to lead to improvised decisions, missed deadlines, and ultimately a finding of culpability that could have been avoided with diligent, well-planned action.
How GraciaCalbet Can Help You
At GraciaCalbet we have spent more than 45 years supporting companies, self-employed professionals and investors through moments of financial difficulty, with an approach that combines legal rigour with the practical clarity that decision-making under pressure demands. Our team in Barcelona and Madrid analyses every insolvency situation from the first contact, assessing whether it is worth exploring pre-insolvency mechanisms, filing for voluntary proceedings in time, or preparing a defence against mandatory proceedings brought by a creditor.
We work both with debtors who need to bring order to their business crisis and with creditors who want to understand and protect their position within someone else’s insolvency proceedings, correctly classifying their claims and assessing the most realistic recovery routes. If your company is going through cash-flow difficulties, if you have received a demand for non-payment, or if you are a creditor of a company in crisis, you can learn more about our insolvency proceedings service and get in touch with us through our contact page to assess your case with the advance notice this type of procedure requires.
Frequently Asked Questions (FAQs)
What is the difference between voluntary and mandatory insolvency proceedings?+
Voluntary proceedings are filed by the debtor itself, within two months of becoming aware of its current or imminent insolvency, which is usually viewed as diligent conduct. Mandatory proceedings, on the other hand, are brought by a creditor when the debtor has not acted despite being insolvent. In practice, the debtor is in a better position under voluntary proceedings, since it retains more room to propose solutions and avoids its diligence being called into question. For a creditor, filing for mandatory proceedings can be the only path available when it has spent a long time trying to collect without success and detects clear signs of insolvency.
When is a company required to file for insolvency proceedings?+
A company must file when it is in current insolvency, meaning it can no longer regularly meet its due obligations, or in imminent insolvency, when it anticipates it will not be able to do so in the near future. The legal deadline for filing is two months from becoming aware, or from when it should have become aware, of that situation. Missing that deadline without acting worsens the economic problem and can have direct consequences for directors’ personal liability if the proceedings are later found culpable.
What is the insolvency administration and what functions does it have?+
The insolvency administration is the body, normally made up of an economist, lawyer or auditor, appointed by the court to take part in the proceedings. Its functions include intervening in or replacing the debtor’s powers over its assets, drawing up the inventory of assets and rights, preparing the list of creditors, and issuing a report on the causes of the insolvency. This report is key, since it usually forms the basis on which the court assesses whether the proceedings should be found fortuitous or culpable, which has direct consequences for the company’s directors.
What happens to the partners of a company that enters insolvency proceedings?+
If the proceedings end in liquidation, partners usually see their stake diluted or entirely extinguished, since the remaining assets are used primarily to satisfy creditors before returning value to the share capital. If, instead, a composition agreement is reached with creditors, the company can continue operating, although usually under renegotiated payment terms that can also affect its corporate structure. Each partner’s specific situation depends largely on the final outcome of the procedure.
Can a director be held personally liable in insolvency proceedings?+
Yes, if the proceedings are found culpable due to wilful misconduct or gross negligence in causing or worsening the insolvency. In such cases, in addition to possible disqualification from managing others’ assets for a set period, the court can order directors to cover part of the insolvency shortfall with their personal assets — that is, the part of the debts not covered by the company’s assets. That is why it is so important to act diligently and within legal deadlines from the first sign of insolvency.
In what order do creditors get paid in insolvency proceedings?+
Claims are classified as preferential, ordinary and subordinated. Preferential claims are backed by a security interest or legal preference, such as certain employment or tax claims, and get paid before the rest. Ordinary claims make up the bulk of commercial claims without special guarantee and are paid pro rata according to the funds available. Subordinated claims, such as those held by parties specially related to the debtor, rank last and usually recover little or nothing of the amount owed. Knowing which category your own claim falls into is essential to realistically assess your chances of recovery.
What is the special procedure for microenterprises?+
It is a simplified and faster route, introduced by the 2022 reform, designed for businesses with a small number of employees and low turnover. It has in practice replaced the former expedited proceedings in most cases, reducing formalities and deadlines and offering continuation or liquidation alternatives adapted to small business structures, which make up the majority of Spain’s business fabric. Its aim is to prevent the complexity and cost of ordinary proceedings from being disproportionate for smaller businesses.
Are there alternatives to insolvency proceedings before reaching current insolvency?+
Yes. The 2022 reform strengthened pre-insolvency mechanisms, such as the communication of the opening of negotiations with creditors and restructuring plans, which allow debt to be renegotiated with more flexibility and without the need for formal insolvency proceedings. These tools tend to offer more room to manoeuvre the earlier they are activated, precisely during imminent insolvency, before the situation becomes current insolvency. Having specialised advice at this early stage is often decisive for the final outcome.
You can consult the full text of the law at the Official State Gazette (BOE), review public information on proceedings at the Public Insolvency Registry, and find further institutional information on insolvency on the website of the Ministry of Justice.
