Spanish insolvency proceedings, in data.

THE DUTY AND ITS CLOCK

Two months. And the clock starts earlier than it looks.

Article 5.1 of the consolidated Spanish Insolvency Act requires the debtor to file for insolvency within two months of the date on which they knew, or should have known, of their state of insolvency. Not from the day the decision is taken, nor from the day cash runs out: from the day it should have been known. That distinction is what later decides the culpability ruling.

• Insolvency is presumed culpable

  Breaching the duty to file makes the insolvency presumed culpable unless proven otherwise. The burden of proving otherwise shifts to the director.

  art. 444.1 TRLC
• Disqualification of two to fifteen years

  A ruling of culpable insolvency disqualifies the natural persons concerned from administering other people's assets and from representing any person, and it is recorded at the Mercantile and Land Registries.

  art. 455.2.2 TRLC
• Covering the shortfall from personal assets

  Once liquidation opens, the court may order directors and liquidators, whether de jure or de facto, to cover the insolvency shortfall in whole or in part.

  art. 456 TRLC

The data says what the statute says: half of all proceedings close in under four months, and more than 118,000 are processed with no estate at all, opened and closed almost at once because nothing is left to distribute. Filing late does not only worsen the culpability ruling: it shrinks what can still be negotiated.

Two different situations, two different routes