Insolvency Proceedings (Concurso de Acreedores)

What Is Concurso de Acreedores?

Concurso de Acreedores is the formal insolvency procedure under Spanish law, governed by the Ley Concursal (Real Decreto Legislativo 1/2020, Texto Refundido). It is broadly equivalent to Chapter 11 (reorganisation) or Chapter 7 (liquidation) in the US, Administration or Liquidation in the UK, or Insolvenzverfahren in Germany.

The procedure can be initiated by any debtor — individual or company — that is unable to regularly meet its financial obligations (insolvencia actual), or that foresees becoming unable to do so in the near future (insolvencia inminente).

Voluntary vs Necessary Filing

The debtor has a legal obligation to file within two months of becoming aware of actual insolvency. Failure to file on time is a material factor in determining whether directors are held personally liable for post-insolvency debts in the subsequent calificación (culpability assessment) phase.

Phases of the Procedure

1. Declaration (auto de declaración): The Commercial Court (Juzgado de lo Mercantil) reviews the petition and formally declares the concurso. An insolvency administrator (administrador concursal) is appointed — typically an independent professional (lawyer, economist, or auditor) with no connection to the debtor.

2. Common Phase (fase común): The administrator prepares the inventory of assets and the list of recognised creditors. Creditors file their claims; the administrator reviews and classifies them into privileged (secured), ordinary, and subordinated classes.

3. Resolution Phase: Two alternatives:

   • Convenio (creditor agreement): The debtor or creditors propose a plan — typically including debt haircuts and payment extensions — which must be approved by a qualified creditor majority and ratified by the court. The debtor continues operating.
   • Liquidation (liquidación): If no agreement is approved, or if the debtor requests liquidation directly, assets are sold and proceeds distributed among creditors in the statutory priority order.

4. Culpability Assessment (calificación): Only in cases ending in liquidation. Assesses whether the insolvency was fortuita (unavoidable) or culpable (due to director fraud or gross negligence). A culpable classification can result in directors being held personally liable for the debt deficit and disqualified from management roles.

Pre-Insolvency Tools: Homologated Restructuring Plans

Spain’s 2022 reform implementing EU Directive 2019/1023 (Preventive Restructuring Frameworks) introduced new pre-insolvency tools:

• Planes de Restructuración Homologados: Court-homologated restructuring plans that can bind dissenting creditor classes (cross-class cram-down), similar to the UK’s Restructuring Plan.
• Acuerdos Extrajudiciales de Pago (AEP): Out-of-court payment agreements for smaller debtors (individuals and SMEs).

These tools allow companies to restructure financially without entering formal insolvency, preserving value and reputation.

Effects on Contracts and Employment

Once concurso is declared:

• Contracts with the debtor cannot be unilaterally terminated by counterparties solely because of the insolvency (anti-ipso-facto provisions).
• Employment contracts can be modified or terminated through a special Expediente de Regulación de Empleo Concursal (EREC) approved by the court.
• Set-off rights of creditors are generally suspended.

How BMC Can Help

Our legal team advises directors on insolvency early-warning indicators and their legal obligations, negotiates pre-insolvency restructuring arrangements with creditors, manages concurso filings, and defends directors in culpability proceedings.