Special Procedure for Micro-Enterprises: Digital, Fast Insolvency Without a Court-Appointed Administrator

The Special Procedure for Micro-Enterprises (Procedimiento Especial para Microempresas) was introduced by Law 16/2022 reforming the Texto Refundido de la Ley Concursal (TRLC) and is available to companies and self-employed individuals with fewer than 10 employees and annual turnover below EUR 700,000 or total liabilities below EUR 350,000. Unlike ordinary insolvency proceedings, the procedure operates entirely through a digital platform (the SEM — Servicio Electrónico de Microempresas) without a court-appointed insolvency administrator, allowing three possible outcomes: business continuation through a restructuring plan, a creditor arrangement (acuerdo), or orderly liquidation. The absence of an administrator reduces total costs to a fraction of ordinary proceedings, and the timeline is typically three to six months. The procedure was designed specifically to solve the access-to-insolvency gap that previously left micro-enterprises unable to afford formal resolution of their financial difficulties.

This service is part of our legal advisory practice.

What the Special Procedure for Micro-Enterprises Is and Why It Exists

The special procedure for micro-enterprises is an insolvency instrument created by Law 16/2022, which reformed the Consolidated Insolvency Act (Texto Refundido de la Ley Concursal — TRLC), and entered into force on 1 January 2023. Its purpose is to address a real and well-documented problem: ordinary insolvency proceedings (concurso de acreedores) are so expensive and slow that micro-enterprises simply do not use them.

Before the reform, a company with 5 employees, €200,000 in debt, and no liquidity had two realistic options: file for insolvency at a cost exceeding its means, or close informally and leave debts unresolved. The second option exposed the director to personal liability for failing to file on time. A trap with no easy exit.

The special procedure breaks that trap with three structural changes. First, it eliminates the court-appointed insolvency administrator (administrador concursal), which is the primary cost driver in ordinary proceedings. Second, it digitises the entire process through the SEM (Servicio Electrónico de Microempresas), which drastically reduces both timelines and procedural costs. Third, it offers three routes adapted to different situations: continuing the business under a payment plan, reaching an arrangement with creditors to reduce the debt burden, or liquidating in an orderly manner.

The procedure is available to companies with fewer than 10 employees and annual turnover below €700,000 or total liabilities below €350,000. Both legal entities and individual business owners and self-employed persons (autónomos) with a commercial activity fall within its scope.

The Three Routes: Continuation, Arrangement, and Liquidation

The special procedure is not simply a closing mechanism: it is an insolvency management instrument with three possible outcomes, and selecting the right route at the outset determines much of the final result.

The continuation route is designed for companies that have a viable business but a temporary liquidity problem or an unsustainable debt structure. The business owner submits a continuation plan setting out the operational and financial measures needed to stabilise the company and a creditor repayment schedule. If creditors approve the plan, the company continues operating under the agreed terms. This route requires the business to have realistic prospects of generating the cash flow needed to fulfil the plan.

The arrangement route (via de convenio) is the equivalent of the creditor arrangement in ordinary insolvency proceedings, in simplified form. The business owner proposes a haircut (quita — reduction of the debt principal), a deferral (espera — extension of the repayment period), or a combination of both. If the creditors representing the required majorities vote in favour, the arrangement is approved and binding on all creditors, including dissenting ones. This is the appropriate route when the business is viable but needs to reduce its debt burden to operate normally.

The liquidation route allows the company to be wound down in an orderly manner, realising assets to pay creditors according to their priority ranking (rango de prelación). Unlike an informal closure, liquidation within the special procedure protects the director from personal liability arising from the insolvency, extinguishes outstanding debts to the extent possible, and allows the individual business owner to access the second-chance mechanism (segunda oportunidad) for residual debts that cannot be settled from the liquidated assets.

The Real Cost: Comparison with Ordinary Insolvency Proceedings

The financial saving of the special procedure over ordinary insolvency proceedings is the most immediate argument, but it is worth understanding where that saving comes from and whether there are any trade-offs.

In ordinary proceedings, the main expense is the insolvency administrator. Their fee is calculated on the debtor’s assets and liabilities according to percentages set by royal decree. For a typical micro-enterprise with €200,000 in liabilities and €50,000 in assets, the minimum administrator fee exceeds €15,000, to which must be added notification costs, court fees, and lawyer and procurador fees. The total cost rarely falls below €25,000–€30,000 for this type of company.

The special procedure has no insolvency administrator. Processing is electronic through the SEM, eliminating most of the costly procedural steps. The only relevant costs are legal representation fees (a lawyer and procurador remain mandatory) and advisory fees for documentation preparation. In practical terms, total cost is reduced by 60–80% compared with ordinary proceedings for a comparable micro-enterprise.

The trade-off is that the special procedure requires greater personal involvement from the business owner. Without an insolvency administrator managing the process, the owner must actively participate in document preparation, creditor negotiations, and deadline management on the SEM. Our team takes on the operational management of the procedure to minimise that burden, but the owner’s availability and cooperation are essential to keeping the process on track.

How to Access the SEM and What Documentation You Need

Access to the SEM platform requires a digital certificate or Cl@ve (Spain’s electronic identity system). The platform is available through the Ministry of Justice portal and is the single channel for all procedural steps: from the initial application through to the conclusion certificate.

The documentation required for the application includes: financial statements for the two most recent financial years (balance sheet and profit and loss account), an explanatory memorandum on the current economic situation, a complete creditor schedule showing the amount and due date of each debt, an inventory of the company’s assets and rights, a staff list and the status of employment contracts, and a draft plan if the continuation or arrangement route is chosen.

One of the reasons business owners seek professional advice for this procedure is precisely the preparation of the documentation. The explanatory memorandum in particular requires a coherent narrative of the situation that justifies the chosen route and builds creditor confidence in the plan’s viability. A poorly drafted memorandum can undermine plan approval even when the underlying figures are favourable.

Once the application is submitted, the SEM automatically notifies all creditors identified in the filing and opens the relevant period for the chosen route. Creditors can challenge the micro-enterprise qualification or raise objections to the plan within the established deadlines. The platform manages these steps electronically, which removes much of the deadline uncertainty that characterises ordinary proceedings.

Regulatory Framework: Law 16/2022 and the TRLC Reform

The special procedure for micro-enterprises was created by Law 16/2022, which transposed EU Directive 2019/1023 on preventive restructuring frameworks into Spanish law. The Spanish legislature used the transposition as an opportunity to introduce the micro-enterprise procedure as a genuinely new instrument — not simply a transposition requirement, but a domestic policy response to the well-documented failure of ordinary insolvency proceedings to serve small businesses.

Key provisions of the TRLC governing the special procedure:

• Art. 685 TRLC — eligibility criteria: fewer than 10 employees AND (annual turnover ≤ EUR 700,000 OR total liabilities ≤ EUR 350,000).
• Arts. 686-690 TRLC — the SEM platform, the application content, and the initial procedural steps.
• Arts. 691-700 TRLC — the continuation route and approval requirements.
• Arts. 701-710 TRLC — the arrangement route (quita and espera), voting procedures, and approval majorities.
• Arts. 711-720 TRLC — the liquidation route and asset realisation procedure.
• Arts. 486 et seq. TRLC — the second-chance mechanism (segunda oportunidad) available to individual debtors after liquidation, including the February 2026 Supreme Court expansion of the public debt discharge.

The procedure entered into force on 1 January 2023, and practice under the first two years of operation has allowed identification of the most common procedural challenges and the interpretive positions of the commercial courts.

Sectors Most Affected

Retail and hospitality: these sectors generate the largest volume of micro-enterprise insolvency filings. The combination of high lease liabilities, seasonal revenue patterns, and post-COVID debt accumulation has produced thousands of viable small businesses with unsustainable financial structures that can benefit from the arrangement route.

Professional services and self-employed (autónomos): lawyers, accountants, architects, consultants, and other professionals who have incurred business debt through their activity are eligible for the special procedure. For autónomos with business activity that has generated significant debts, the liquidation route followed by a segunda oportunidad application is frequently the fastest route to a genuine fresh start.

Technology and digital services: the runway exhaustion pattern of small tech companies — continuing to incur employee costs (salaries, social security) after revenue has collapsed — generates a specific insolvency profile where the arrangement route, with a modest haircut on trade creditor debt and a deferral of public debt, can preserve the business and its assets.

Construction and maintenance: small construction subcontractors with public administration payment delays frequently accumulate social security contribution debt that they cannot service while waiting for project payments. The continuation route with a TGSS payment plan coordinated with the SEM procedure is the most common advisory scenario in this sector.

Company Size Segmentation

Autónomos (self-employed) who conduct commercial activity can access the special procedure for their business debts. The key advantage over standard segunda oportunidad proceedings is the ability to negotiate an arrangement with business creditors (suppliers, banks, AEAT, TGSS) and continue the business — rather than simply liquidating the business and seeking personal debt discharge for the residual balance.

Microenterprises with 1-9 employees are the primary users of the procedure. The elimination of the insolvency administrator — the primary cost driver in ordinary proceedings — makes the procedure economically viable for businesses whose total liabilities are modest. A total liability of EUR 150,000 that would generate EUR 20,000+ in administrator fees in ordinary proceedings can be managed in the special procedure for a fraction of that cost.

Companies that have recently grown beyond the thresholds (10+ employees, EUR 700K+ revenue) are no longer eligible for the special procedure but may qualify for the full range of Book I TRLC restructuring tools. The transition from special procedure eligibility to standard insolvency tools should be planned carefully to ensure that the timing of any insolvency filing maximises the options available.

Directors’ Personal Liability and the Special Procedure

One of the most important practical benefits of the special procedure is its impact on directors’ personal liability. As with ordinary insolvency proceedings, a director who files for insolvency (or accesses the special procedure) within the two-month deadline from the moment current insolvency arose — and who has not engaged in conduct that would give rise to a culpable qualification — is protected from personal liability under Art. 367 LSC.

The special procedure does include a simplified culpability assessment: the court can classify the insolvency as culpable in extreme cases. However, the most common scenario — a director who acted diligently but whose micro-enterprise became insolvent due to market conditions — does not generate culpable classification, and the special procedure allows the director to close the chapter without personal liability for the company’s debts.

Common Mistakes We Fix

1. Waiting until the AEAT or TGSS has already initiated enforcement before applying. Enforcement proceedings by AEAT (providencia de apremio) or TGSS complicate the special procedure significantly. The filing of the SEM application does not automatically stay AEAT enforcement; coordination with the tax authority must begin before or simultaneously with the SEM filing. Early application — as soon as current insolvency is clear — maximises the options available.

2. Choosing the wrong route. The three routes (continuation, arrangement, liquidation) are not interchangeable, and choosing the wrong one wastes time and increases cost. A company that files for the continuation route when the business is not operationally viable will fail to obtain creditor approval and will need to restart the procedure under the arrangement or liquidation route. The initial route selection must be based on a realistic assessment of the business’s continuing viability.

3. Not addressing public debt separately. AEAT and TGSS debts have specific treatment within the special procedure but also have their own deferral mechanisms. Coordinating the SEM procedure with AEAT deferral applications and TGSS instalment arrangements often produces better outcomes for the company than relying on the procedure alone to resolve public debt.

4. Not using the procedure because of perceived stigma. The special procedure is designed to be a normal business management tool, not a mark of failure. Unlike ordinary insolvency proceedings, it does not appear in the Registro Público Concursal in the same way, and it is completed without court proceedings in the public eye. The stigma concern, frequently cited by business owners, is significantly less applicable to the special procedure than to ordinary insolvency.

5. Preparing the documentation without legal assistance. The explanatory memorandum and the plan must be legally coherent and commercially credible. Creditors — including AEAT and TGSS, who have specific criteria for evaluating plan proposals — assess the quality of the documentation. A poorly prepared application generates creditor objections that delay the procedure and reduce the probability of plan approval.

Geographic Coverage

We manage special procedure filings across Spain through the SEM platform, which is accessible from any location. Our case managers with specific TRLC micro-enterprise procedure experience are based in Madrid, Málaga, and Marbella. For clients in other provinces, we provide the complete service remotely, with personal meetings at the diagnostic and plan design stages as appropriate.

How We Work

Our micro-enterprise insolvency practice is designed to be accessible and efficient. An engagement typically follows three phases:

Phase 1 — Diagnostic (1 week): financial position assessment, eligibility confirmation, route selection recommendation, and director liability analysis. Fixed fee.

Phase 2 — Application preparation (1-2 weeks): documentation preparation (financial statements summary, creditor schedule, asset inventory, explanatory memorandum, draft plan), SEM registration, and application submission.

Phase 3 — Procedure management: creditor communication management, objection responses, voting facilitation (for arrangement route), and coordination with AEAT and TGSS on public debt elements throughout the procedure.

Total fixed fee for a standard micro-enterprise special procedure (arrangement or liquidation route, liabilities under EUR 200,000): available on request at initial consultation.

Second-Chance Law for Individual Debtors: Coordination with the Special Procedure

For individual business owners (autónomos and sole traders) who have also incurred personal debts in connection with their business activity — personal guarantees, jointly liable debts, or personal loans taken to finance the business — the special procedure for micro-enterprises addresses the company-level obligations, but the personal debts require a separate mechanism: the segunda oportunidad (second-chance law) under Arts. 486 et seq. TRLC.

The second-chance mechanism allows individuals who have exhausted their assets through insolvency to obtain discharge of their remaining unpaid debts, providing a genuine fresh start. The February 2026 Supreme Court judgments significantly expanded the scope of the mechanism: public debts (AEAT and TGSS) can now be partially discharged — surcharges, interest, and penalties in full; principal within TRLC limits — making the mechanism genuinely effective for entrepreneurs whose personal debt is primarily public debt accumulated during their business activity.

We coordinate the special procedure for the micro-enterprise with the segunda oportunidad application for the individual, ensuring that the timelines are aligned and that the documentation prepared for the special procedure is also used in the personal insolvency proceedings. This coordinated approach reduces both cost and timeline for entrepreneurs who need to resolve both dimensions simultaneously.

Interaction with Employment Obligations

For micro-enterprises with employees, the special procedure must account for the employment law obligations triggered by the insolvency. Workers are preferential creditors in insolvency proceedings for unpaid wages (up to 30 days, maximum double the inter-professional minimum wage) and for the statutory severance component (20 days per year of service, up to 12 months). FOGASA (Fondo de Garantía Salarial) guarantees payment of certain employment obligations when the company is insolvent, providing an important safety net for workers whose employers enter the special procedure.

The practical implication for the procedure is that employment obligations — particularly FOGASA-guaranteed obligations — must be correctly classified in the creditor schedule and the plan must account for them. Misclassification of employment obligations in the creditor schedule or failure to coordinate with FOGASA can delay plan approval or create personal liability for the director under Art. 367 LSC for employment debts incurred after the dissolution cause arose.

Common Tax Issues in the Special Procedure

The tax implications of the special procedure — particularly for the arrangement route — are frequently overlooked. Key issues:

Income tax treatment of debt forgiveness (quitas): when creditors agree to a haircut on the principal amount owed (quita), the forgiven amount is in principle income for the debtor. However, LIRPF Art. 33.4.h and LIS Art. 11.13 exempt from income tax the debt forgiveness obtained in TRLC insolvency proceedings, which includes the special procedure. This exemption is an important planning element: the arrangement route’s haircuts do not generate additional tax liability for the debtor.

VAT on asset sales during liquidation: assets sold in the liquidation route are subject to VAT unless the sale qualifies as a business transfer (Art. 7.1 LIVA). Where the asset sale constitutes the transfer of a going concern, VAT is not charged, reducing the net proceeds available for creditor payment. We assess this classification in the documentation preparation phase to maximise the proceeds available for creditor distribution.

Continued AEAT and TGSS obligations during the procedure: the special procedure does not exempt the business owner from continuing to file tax declarations and pay current obligations as they fall due during the procedure. Failure to continue filing and paying current obligations while the procedure is pending creates new compliance violations that complicate the plan approval.