top of page

Dealing with Company Bankruptcy and Debts under Spanish Law

Updated: Feb 7


İrem Çalımcı  is the author of the article titled : dealing with company bankruptcy


Publication date: 11.08.2023


When a company faces financial distress and declares bankruptcy, it can be a distressing situation for creditors who are owed money. Actually, it’s difficult to understand your rights as a creditor with unpaid debts from a company that has gone bankrupt. This article aims to provide guidance on what to do if a company goes bankrupt and owes you money in Spain.


1. Understand the Bankruptcy Process


In Spain, bankruptcy proceedings are governed by the Insolvency Law. That’s why the bankruptcy process aims to protect the interests of all creditors. So, it is crucial to closely follow the bankruptcy proceedings to safeguard your rights as a creditor.


2. Appointment of the Insolvency Administrator


Upon filing for bankruptcy, a competent court appoints an insolvency administrator (administrador concurs). In particular, the administrator's role is to oversee the entire bankruptcy process. Then, they safeguard the company's assets and assess the company's financial situation.


3. Submit Your Credit Claim


As a creditor, you must submit your credit claim to the appointed insolvency administrator. This claim should detail the amount owed to you by the company, along with any supporting documents.


4. Creditors' Meeting


After gathering all claims from creditors, the insolvency administrator organizes a creditors' meeting (junta de acreedores). During this meeting, the administrator presents the financial situation of the company.


5. Review the Insolvency Plan


If a restructuring plan is proposed and approved, the company may continue its operations under certain conditions. So, as a creditor, you should carefully review the insolvency plan to determine if your interests are adequately protected.


submitting credit claim

6. Liquidation and Asset Distribution


If the restructuring plan is not feasible, the company proceeds with liquidation (liquidación). During this phase, the company's assets are sold, and the proceeds are distributed among creditors according to the priority established by the law.


7. Preferential Creditors and Secured Creditors


Under Spanish bankruptcy law, there is a priority order for debt payment. In particular, preferential creditors(créditos con privilegio especial) have priority over ordinary unsecured creditors. These may include employees' salaries, public authorities, and certain taxes.


Secured creditors have a higher likelihood of recovering their debts because they hold a specific guarantee on the company's assets.[1] If you are a secured creditor, you may enforce your rights on the collateral, subject to the insolvency proceedings.


8. Monitor the Proceedings


Throughout the bankruptcy process, stay vigilant and keep track of developments. Attend the creditors' meetings, communicate with the insolvency administrator, and seek legal counsel.


9. Seek Legal Advice


seeing legal advice for bankruptcy

Given the complexities of the bankruptcy process, you should seek legal advice from a qualified attorney experienced in insolvency matters. So, they can guide you through the process, assess your options, and advocate for your rights as a creditor.


10. Be Prepared for Potential Losses


While the bankruptcy process aims to distribute the available assets fairly among creditors, it is essential to be prepared for the possibility. Bankruptcy often results in losses for creditors, especially unsecured ones.



How to deal with a company bankruptcy and debts in Spain


To sum up, dealing with a company's bankruptcy and unpaid debts can be challenging. That’s why it’s crucial to understand the process and your rights as a creditor under Spanish law. By seeking legal advice, you can navigate the complexities of the insolvency process. Remember to stay informed, act promptly, and exercise your rights diligently to protect your interests as a creditor.


 

You can also read about:

 

Reference List




15 views0 comments

Comments


bottom of page