Business Restructuring: Restore Viability Before Options Close

Business restructuring is the process of reorganising a company's financial obligations, operational structure, or ownership to restore viability when the business faces financial distress, unsustainable debt levels, or declining profitability. In Spain, the legal framework for restructuring was substantially reformed by Law 16/2022, which implemented EU Directive 2019/1023 on preventive restructuring frameworks and introduced the homologated restructuring plan procedure, cross-class cram-down mechanisms, and enhanced protection periods for viable businesses negotiating with creditors. Out-of-court restructuring — Refinancing Agreements and Out-of-Court Payment Agreements — allows companies to negotiate directly with creditors without judicial intervention, while formal insolvency proceedings (concurso de acreedores) under the Consolidated Insolvency Act provide court-supervised protection and an orderly framework for business sale or liquidation; directors who fail to declare insolvency within the legally required period face potential personal liability under Spanish insolvency law.

Business restructuring demands speed, discretion, and a well-grounded strategy. Our team has guided dozens of Spanish companies through restructuring processes — from complex bank refinancings to multi-creditor insolvency proceedings — with a consistent focus on preserving business value and employment.

Why Companies That Wait Too Long to Restructure Close Options That Were Available Earlier

Companies facing financial stress consistently wait too long to seek restructuring advice. By the time a company enters formal insolvency proceedings, the negotiating options that existed six months earlier have been foreclosed. Assets have been pledged, suppliers have tightened terms, key employees have begun to leave, and creditors have shifted into defensive mode. The difference between a company that achieves a clean refinancing and one that ends in liquidation is almost always the speed of the initial response — not the underlying viability of the business. If your company has experienced cash flow problems, declining margins, or covenant breaches for two or more consecutive quarters, the time to act is now — not when the bank calls in the loan.

Our Financial and Operational Restructuring Process: From Diagnostic to Creditor Agreement

Early engagement is the foundation of a successful restructuring. We conduct a rapid viability assessment and financial diagnostic, identify the critical path to solvency, and construct a creditor-ready viability plan with credible assumptions that unlock creditor cooperation. We design and manage the creditor negotiation process: coordinating across multiple bank creditors to prevent individual banks breaking ranks, managing trade creditor and public body workstreams in parallel, and structuring the financial solution — haircuts, deferrals, debt-for-equity, new money — that preserves business continuity. For viable businesses where out-of-court solutions are insufficient, we manage pre-insolvency tools under Law 16/2022 and, where necessary, the formal insolvency process with the same focus on preservation of value. Where business sale is the preferred outcome, our coordination with the M&A team ensures the disposal process achieves the highest possible price while preserving employment.

Real Results in Restructuring: €1.2B+ Restructured, 73% Without Formal Insolvency

• 73% of restructuring mandates resolved without formal insolvency proceedings — out-of-court agreements that preserve reputation and relationships.
• EUR 1.2B+ in debt restructured or refinanced across 80+ mandates.
• Pre-insolvency communication (preconcurso) managed strategically to grant three months of protection while creditor negotiations proceed.
• Viability plan development with credible financial projections accepted by financial institutions, trade creditors, and commercial courts.
• Tax coordination: debt write-off tax treatment, employment restructuring authorisations (ERE/ERTE), and tax planning integration throughout the process.

Spanish restructuring law was substantially reformed by Law 16/2022 implementing EU Directive 2019/1023 on preventive restructuring frameworks. Pre-insolvency tools — the restructuring plan homologation procedure, the special protection period, and the cross-class cram-down mechanism — now provide significant new options for viable businesses facing financial difficulty. Formal insolvency proceedings under the Consolidated Insolvency Act provide an orderly framework for sale of business units as a going concern. Directors of Spanish companies have potential personal liability in insolvency proceedings if the company was not declared insolvent in a timely manner — early engagement with a restructuring adviser reduces this risk directly. Tax and employment consequences of restructuring transactions require coordinated advisory across our tax, employment law, and corporate finance teams.