Business insolvency

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Business insolvency. bankruptcy, judicial liquidation, express bankruptcy

Commercial companies can have crisis situations. It is important to detect a business crisis situation on time and the recommendation from our law firm is to avoid abusive bank refinancing situations with extended guarantees and personal assets without a clear strategy in a flight forward, but without an improvement solution. The entrepreneur can start over as long as he has not consumed all his personal resources and patrimony in a project without a future. It is important to know the objective opinion of experts in such cases and to help the businessman decide the best solution for his future, which in many cases means liquidating the company and starting new projects at the same time.

The company may not have a solution and to avoid the irreparable situation of derivation of business debts to the social administrators and even to partners if they are attorneys , it is important that the company presents some type of liquidation that we propose below.

The commercial methods of liquidation are based on the situation of the company. After analyzing the situation of the company carried out by our team of experts, we will advise you on the type that best suits the situation in which the company finds itself.

The administrators or empowered partners will NOT have to answer for the social debts, in any of the liquidation or bankruptcy modalities, and this will largely depend on the follow-up of the procedure carried out by the hired professionals. Our team performs an intervention in the entire procedure from the beginning of the contract until its completion with accredited results of 100% of cases resolved successfully.

We DO NOT recommend in any case Cessation of Activity leaving Debts, or what is commonly known as “LEAVE THE COMPANY INACTIVE, WITH DEBTS”, since you will ultimately have to answer for the debts and you will not be able to cease as administrator of the company. The law establishes that the de facto or de jure administrators of those legal entities that have ceased their activities, will be responsible with their own assets for the accrued tax obligations that are pending at the time of cessation, provided that they have not done what is necessary. for payment or have adopted agreements or taken measures causing non-payment. The presentation of any of our liquidation or insolvency modalities avoids the derivation of this responsibility towards the directors of the company.

Solutions for business insolvencies

The liquidation or contest modalities are:


Modality of bankruptcy, which is characterized by the rapidity in the extinction of the company, agreed by court order, without actually appointing a bankruptcy administrator . The liquidation functions are carried out by the administrator himself who becomes liquidator for the sole purpose of classifying and distributing the assets that exist in the company at the time of issuing the dissolution and extinction order.

The art. 37 bis of the TRLC in the wording in force since September 26, 2022 provides that it is considered that there is bankruptcy without estate when the following assumptions concur in this order: a) The bankrupt lacks assets and rights that are legally attachable. b) The cost of realizing the assets and rights of the bankrupt was manifestly disproportionate with respect to the foreseeable market value. c) The goods and rights of the bankrupt free of charges were of a value lower than the foreseeable cost of the procedure. d) The encumbrances and charges existing on the assets and rights of the bankrupt are higher than the market value of those assets and rights. This provision is applicable, in accordance with the First Transitory Provision of Law 16/2022, of September 5, section 1, 1, to all contests declared after its entry into force.

Article 37 ter of the TRLC in the wording in force since September 26, 2022 provides that if the application for declaration of bankruptcy and the accompanying documents show that the debtor is in any of the situations referred to in the previous article, the judge will issue an order declaring the bankruptcy, with expression of the liability resulting from the documentation, without further pronouncements, ordering the telematic referral to the “Official State Gazette” for publication in the supplement of the single judicial edictal notice board and the publication in the Public Bankruptcy Registry with an appeal to the creditor or creditors representing at least five percent of the liabilities so that, within fifteen days from the date of the publication of the edict, they can request the appointment of a bankruptcy administrator to file:

1.º If there are sufficient indications that the debtor had carried out acts detrimental to the active mass that are rescindable in accordance with the provisions of this law.

2.º If there are sufficient indications for the exercise of the social action of responsibility against the administrators or liquidators, in law or in fact, of the bankrupt legal person, or against the natural person designated by the administrative legal person for the permanent exercise of the functions inherent to the position of legal person administrator and against the person, whatever their name, who has been assigned powers from the highest management of the company when there is no permanent delegation of powers from the board to one or more CEOs.

3.º If there are sufficient indications that the contest could be classified as guilty.

In the event that, within the term, no legitimate person has made that request, an order will be issued containing the pronouncements provided for in article 485 TRLC, ordering the provisional closure of the open sheet to the legal entities included in this joint request in the public register in which they are registered. As soon as this resolution becomes firm, the lawyer of the Administration of Justice will issue an order containing testimony of the resolution, with expression of firmness, which will be sent by electronic means to the corresponding registry. After one year has elapsed since the judge ordered the closure of the registration sheet without the reopening of the competition, the registrar will proceed to cancel the registration of the legal entity, with definitive closure of the sheet.

Our office is an expert in achieving the extinction of the company through this type of contests without mass. This type of bankruptcy can only be agreed upon by the judge himself, who will decide based on the situation of the company , but due to our extensive experience in these procedures, we know how to get the commercial court to agree on this type of liquidation, adapting the company to the necessary requirements. .

In the event that the company does not meet the requirements and it is difficult to adapt to them due to the type of debts, you can always opt for the second mode of termination or voluntary bankruptcy with immediate liquidation (see bankruptcy with immediate liquidation modality ).

In a first consultation of the situation of the company we will already know if it meets the requirements for filing an express bankruptcy. It doesn’t matter if the company has been inactive for years.

Duration of the procedure between 3 and 6 months.


  • Company with debts, there is no minimum or maximum amount.
  • Company without workers, or who have been dismissed prior to filing the claim with the Mercantile Courts. If they exist, our team plans the dismissal.
  • Company that has ceased or will cease its activity.
  • Company Without ASSETS, or assets of little value, or, where appropriate, real estate with loans with mortgage guarantee, but with important debts with creditors.

Subsequently, our team plans and carries out the corresponding liquidation operations, drafting a report and liquidation act that will be communicated to the different courts and that ends with the total disappearance of the company.

To check if your company is the perfect candidate for a COMPETITION and its simultaneous conclusion, consult our team by appointment without obligation and you will receive complete advice at no cost in the first consultation.


If the company, due to the type of volume of debts, with significant debts against creditors with privileges, including workers with significant compensation for seniority, the Tax Agency and Social Security, this type of liquidation may be appropriate. It is suitable for those cases where the previous modality is not agreed (see express tender).

As in the previous case, our team of experts prepares the company in advance of the liquidation request, both at an accounting and business level to avoid liability situations later.

The application to the court is accompanied by the necessary documents reviewed and prepared personally by our team to guarantee the success of the liquidation without resulting in guilt for the businessmen, which is our first objective.

In the same insolvency claim, the immediate liquidation of the company is requested, the result is that the court appoints a liquidator who will carry out the work of liquidation of the assets and payment, where appropriate, of company debts up to the extent of the assets. In this modality there is neither a common phase nor an agreement phase, which results in a rapid liquidation of the company. The duration is between 6 and 18 months, but unlike other professionals, our office deals with the liquidation by working together with the judicial liquidator while the employer ceases his functions as administrator, being able to start other activities while the procedure is resolved.

The success of our work in this matter is 100% positive results, having liquidated each and every one of the companies without responsibility for the employer.


Companies can enter into situations of insolvency due to a lack of liquidity even when they have significant assets. In most cases, this lack of liquidity becomes insolvency of the company due to the impossibility of meeting current obligations and this, if not treated in time, it can become a REAL AND SERIOUS LIABILITY FOR THE COMPANY’S ADMINISTRATORS AND PARTNERS.

The obligation to file bankruptcy is detected when there are widespread non-payments and especially when there are tax and Social Security debts of more than 3 months accumulated together with wages pending payment for the same period.

In these cases, if there is no contest with creditors, it may happen that a creditor requests NECESSARY CONTEST from the Court and in this case it can be considered guilty contest and the administrators have to assume the social debts with their personal assets.

Previously we made a COMMUNICATION OF NEGOTIATIONS to the Court. Where you have a period of 3 months to negotiate with creditors without incurring liability and without any creditor being able to request the necessary bankruptcy. Said communication is made under the provisions of article 583 Consolidated Text of the Bankruptcy Law. After communication, the appointment of a restructuring expert who will not have intervention functions may be requested.

After the three months have elapsed, if an agreement has been reached with your creditors, the file of the procedure is communicated to the court. The company has emerged from insolvency.

If agreements are not reached within three months, a voluntary creditors’ meeting will be filed in the following month. Said communication of voluntary insolvency can be made with the intention of giving continuity to the company, but through the judicial agreement of removal and waiting on company debts to favor continuity. This is what is called the agreement phase, which will in any case be followed by a bankruptcy administrator appointed for this purpose. If the approval of the agreement with the creditors is finally achieved, the company would come out of the insolvency situation and the bankruptcy situation, ceasing the judicial administrators and having obtained important reductions and waiting of its company debts through the judicial approval of the agreement agreement.

If it is not possible to agree on the agreement, the company will go into liquidation, being extinguished and without liability for the partners.

We have demonstrable experience in bankruptcies from €50,000.00 to €100,000,00.00. We are bankruptcy administrators .



Law 25/2015, of July 28, on the second chance mechanism, reduction of the financial burden and other measures of a social order, commonly known as the Second Chance Law, was approved in 2015 and reformed in September 2022 with the objective to offer individuals and the self-employed a legal mechanism with which to reduce or cancel their debts after an economic, business or personal failure, so that they could be exonerated from the debts they dragged and could get their lives back on track: a law that, in In short, it offers a second chance.

Who can benefit from the Second Chance Law?

This legal mechanism is aimed at individuals and the self-employed whose total debts do not exceed 5 million euros.

How is the process to follow?

Application addressed to the Commercial Court

The second chance process therefore begins with the request addressed to the Commercial Court, whether the debtor is self-employed or not. The content of the request must be detailed and clear about the personal situation of the debtor, the fulfillment of the requirements, the type of insolvency and the available income.

Once the request has been processed with the documents proving the situation of the debtor and his possibilities, the judicial phase begins where the debtor may choose between exoneration with liquidation of assets or without liquidation but with a payment plan.

Both modalities are interchangeable, since the debtor who has obtained a provisional exemption with a payment plan can leave it without effect at any time and request the exemption with liquidation.

Waiver with payment plan

With this option, the debtor will be able to protect his family home and business assets, if any, by canceling part of his debts and having to pay the rest of his debts through a 3 or 5-year payment plan.

If the payment plan is chosen, the lawyer of the Administration of Justice will transfer the proposal to the creditors in person so that, within ten days, they can make their allegations on the concurrence of the budgets and legal requirements.

Once the allegations have been presented or after ten days have elapsed, the judge will provisionally grant the exemption of the unsatisfied liability and will approve the payment plan in the terms of the proposal or with the modifications it deems appropriate.

Finally, after the term agreed for the payment plan has elapsed without the exemption having been revoked, the Judge will proceed to grant the definitive exemption of the unsatisfied liability by means of an order.

Exoneration with liquidation

With this option, the debtor will be able to cancel all his pending debts (except those legally non – exonerable ) in exchange for sacrificing all his assets, if he had any.

If the debtor opts for the liquidation of his assets, the next step will be the consecutive contest, in which the cancellation of the debts that after the reform will be extended to all bankruptcy credits and against the estate will be requested.

The measures introduced by the bankruptcy reform

Until now, the Second Chance Law was based on the out-of-court payment agreement and the benefit of exoneration of unsatisfied liabilities (BEPI) by which the competent judge, in the event of a failed agreement, determined what percentage of the debt could be exonerated.

After the insolvency reform, the requirement to attempt an out-of-court payment agreement has been eliminated and exonerated debts have been extended to insolvency and against the estate, in addition to regulating two possible alternatives for the cancellation of debts: exoneration with liquidation of assets or with a payment plan without liquidation.

The liquidation of the debtor’s assets is not required to exonerate his debts

If the debtor wants the exoneration of debts without prior liquidation of his estate, he must commit to a payment plan in which he allocates his rents and future income during a general period of three years to the satisfaction of his debts.

A bankruptcy claim is filed before the commercial courts without the need for an out-of-court settlement

With the new Second Chance Law it is possible to cancel up to a maximum of €10,000 of debt with the Treasury and another €10,000 of debt with Social Security.

The essential difference of this process is that the debtor, after undergoing this process, sees all his debts exonerated with the liquidation of his assets, unlike the general rule that establishes that the debts will be satisfied by the debtor with his present assets. and futures.

What requirements are required?

La Ley establece varios requisitos que el deudor debe reunir para poder acogerse a este mecanismo legal y ver exoneradas sus deudas:

  1. El patrimonio del deudor es insuficiente para la satisfacción de los créditos de sus acreedores.
  2. El deudor debe haber actuado de buena fe.

¿Qué se entiende por buena fe en este proceso? 

The Law establishes several requirements that the debtor must meet in order to benefit from this legal mechanism and see their debts exonerated:

  1. The debtor’s assets are insufficient to satisfy the claims of his creditors.
  2. The debtor must have acted in good faith.
What is meant by good faith in this process?

The Law requires that the debtor concurs in good faith as a budget for the exoneration of his debts. In order for the good faith of the debtor to be appreciated, the following is required:

  1. Not have been declared guilty in the bankruptcy proceedings. However, the law establishes that the judge can exonerate debts even when the contest has been declared guilty, provided that the debtor does not appreciate intent or negligence.
  2. Not have been sentenced in a final sentence for crimes against property, against the socioeconomic order, for false documents, against the Public Treasury or Social Security in the 10 years prior to the request.
After the process, are all debts exonerated?

The Law contemplates two exceptions to the exoneration of the debts of the bankrupt: food credits, and public law credits (Public Treasury and Social Security) up to a limit of 10,000 euros for each type of debt, with a maximum of 20,000.

The first 5,000 are paid in full and from that figure 50% up to the established limit. The rest of the public debt will be subject to a payment plan as before

Can the debtor keep his habitual residence?

Thanks to the reform, the debtor will be able to keep his home as long as a payment plan is drawn up to satisfy part of the non- exemptible debt , as well as a certain part of the exonerate him. Said payment plan may have a waiting period of up to five years without interest.

In the event of foreclosure, the Second Chance Law allows the debtor who does not have more assets to see 100% of the outstanding debts exonerated once the home is delivered.

Can it be carried out in parallel to some type of liquidation or bankruptcy of a mercantile company?

If the businessman who has opted for any of the above modalities of liquidation or bankruptcy has personally guaranteed business debts, he can also opt for this procedure for the exoneration of debts on a personal level, being able to start again without problems in the business world.

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