Restructure your Spanish company with legal certainty and tax efficiency

When restructuring a Spanish company makes sense

Corporate restructurings aren’t reserved for large corporations. In the Spanish business landscape — predominantly SMEs and family businesses — several scenarios make reorganisation necessary or highly advisable:

• Growth and diversification: Separating distinct business areas into independent legal entities for separate management, sale or financing.
• Succession planning: Creating a holding structure facilitates generational transmission with greater tax efficiency and less heir conflict.
• Investor entry: Venture capital funds and institutional investors typically require an orderly corporate structure as a precondition.
• Real estate asset separation: Many companies mix real estate with operating activity. Segregating it to an independent patrimonial company protects the asset from operating risks and improves tax planning.

Most frequent restructuring operations

Merger by absorption: A company (absorbing) integrates the patrimony of another (absorbed), which is extinguished. Simplest operation for group consolidation.

Partial demerger: A company segregates a part of its patrimony constituting an autonomous economic unit and contributes it to a beneficiary company. The demerging company is not extinguished.

Non-monetary contribution of business branch: A company contributes a part of its business to another company in exchange for shares. The basis for creating most holding structures.

Securities exchange: Shareholders transmit their shares to another company in exchange for the latter’s shares. Heavily used for integrations and family holding creation without immediate tax cost.

The tax neutrality regime: the key to efficient restructuring

The characteristic making most Spanish restructurings viable is the special tax neutrality regime (arts. 76-89 LIS). Without it, a demerger involving the transmission of real estate with latent capital gains would generate immediate taxation often making the operation unviable.

With the special regime, assets and liabilities are transmitted at the tax values they had in the transferring entity, without surfacing latent gains. Taxation is deferred until the acquiring entity transmits the assets to third parties. This deferral can be permanent if the structure is maintained or if the assets are transmitted in a future operation also under the special regime.

Corporate restructuring vs debt restructuring: two distinct pathways

Under the umbrella term “corporate restructuring”, two very different legal pathways are grouped:

Corporate restructuring (Chapter VII Title VII LIS operations): Mergers, demergers, non-monetary contributions and securities exchanges under the special tax neutrality regime. Apply to operating, healthy companies needing reorganisation. Optimisation operations — not a crisis response.

Debt and financial restructuring (Texto Refundido de la Ley Concursal — TRLC): Procedures for companies with financial difficulties or imminent insolvency. After the Law 16/2022 reform (transposing EU Directive 2019/1023 on preventive restructuring frameworks), the TRLC clearly distinguishes pre-insolvency and insolvency phases with specific instruments in each.

Both can be combined: a company may initiate corporate restructuring to prepare for refinancing, or conclude a pre-insolvency Restructuring Plan and subsequently undertake corporate mergers to rationalise the group.

Pre-insolvency restructuring after Law 16/2022: the Restructuring Plan

Law 16/2022 replaced the previous refinancing agreements and extrajudicial payment agreements (regulated in the now-derogated art. 71bis LC and 4th additional provision LC) with a single unified figure: the Restructuring Plan (Plan de Reestructuración).

How it works

The Restructuring Plan is a pre-insolvency instrument designed for companies in probability of insolvency, imminent insolvency or actual insolvency retaining economic viability. It allows restructuring of liabilities (haircuts, extensions, debt-to-equity conversion, refinancings) and, where applicable, assets and contracts, through agreement with creditors. Regulated in arts. 583 to 698 TRLC.

Key features introduced by Law 16/2022:

• Communication of opening of negotiations (art. 585 TRLC): Initiates a protection period of up to 3 months extensible, during which individual enforcement against the debtor’s patrimony is suspended.
• Creditor classes: The plan groups creditors in classes with homogeneous interests. Each class votes separately.
• Judicial homologation (arts. 633-658 TRLC): A plan meeting the required majorities is submitted to judicial approval, conferring executive force against dissenting creditors.
• Cross-class cram-down: Ability to impose the plan on entire dissenting creditor classes, even shareholders, if equity and viability requirements are met.
• Protection of interim and new financing: Credits granted during negotiation and provided in the plan enjoy special privilege against eventual subsequent insolvency.

When to use it

• The company is still viable but the current debt structure suffocates it.
• There is a negotiating disposition from at least a significant part of the creditors.
• Avoiding insolvency entry (with loss of control, commercial stigma and higher cost) is needed.
• A more flexible solution than bilateral agreements with each creditor is required.

Insolvency restructuring: when pre-insolvency doesn’t suffice

If the Restructuring Plan fails or isn’t viable from the start because the company is in actual insolvency without reasonable viability perspective, the pathway is the insolvency proceeding (concurso de acreedores) regulated in the TRLC. The Law 16/2022 reform also significantly modified the proceeding, introducing:

• Special insolvency proceeding without assets (micro-enterprises): Simplified procedure for companies with fewer than 10 workers and assets or liabilities below €700,000.
• Special procedure for micro-enterprises (arts. 685-720 TRLC): Simplified electronic procedure with more agile processing and reduced costs.
• Continuation plan: Allows proposing a plan within the insolvency proceeding maintaining business activity during processing.

FEAC and sectoral frameworks

For business groups with high banking debt, the Spanish financial sector has the Forum for Companies with Creditors in Crisis (FEAC) — a voluntary negotiation framework between debtor and main financial creditors. Frequently concludes in agreements elevated to judicial homologation under the TRLC.

Free restructuring diagnosis

Unsure whether your company needs corporate restructuring, refinancing, pre-insolvency Restructuring Plan or whether insolvency is the path? BMC offers a free 15-minute initial diagnosis to identify the appropriate pathway.

The diagnosis covers: current financial state and 12-month projections; liability composition (financial, commercial, public); available assets and approximate valuation; preliminary identification of the applicable legal framework (corporate Chapter VII LIS, pre-insolvency Law 16/2022, insolvency TRLC); indicative timelines and costs of the recommended pathway.

Request your free diagnosis through the BMC contact form indicating “Restructuring Diagnosis” in the subject. We’ll contact you within 48 hours maximum.