Legal
Insolvency & Bankruptcy Proceedings
We lead the insolvency procedure from filing to resolution, with integrated tax and accounting support. Composition agreement or orderly liquidation, depending on the company's real situation.
What is it?
Spain's insolvency procedure (concurso de acreedores) is governed by the Consolidated Insolvency Act (Texto Refundido de la Ley Concursal, TRLC). When a company is unable — or foresees it will soon be unable — to meet its payment obligations, the law requires its directors to file for insolvency proceedings before the Mercantile Court within two months of becoming aware of the insolvency. Failure to do so exposes directors to personal liability for the company's debts incurred after that point.
The proceedings can result in two main outcomes. A composition agreement (convenio de acreedores) involves negotiating a reduction (quita) and/or deferral (espera) of debts with creditors, allowing the business to continue trading under a restructured debt burden. Alternatively, if a viable composition cannot be reached or approved, the court orders an orderly liquidation of the company's assets to satisfy creditors to the greatest extent possible. The 2022 reform also introduced pre-insolvency restructuring plans for companies that want to act before formally entering insolvency.
At GCT1 we manage corporate insolvency proceedings with integrated legal, accounting, and tax support. Our team prepares the court filing, coordinates with the court-appointed insolvency administrator, assesses the viability of a composition agreement, and supports the company throughout the proceedings. This integrated approach is essential: decisions taken during insolvency have direct and simultaneous consequences in all three disciplines.
Who is it for?
- Companies currently unable to meet their payment obligations, or which foresee they will be unable to do so within the coming months
- Directors who wish to comply with their legal filing obligation and limit their personal liability exposure
- Companies seeking a composition agreement to continue trading with a restructured debt burden
- Businesses that need to wind down in an orderly way that minimises consequences for shareholders and directors
- Creditors considering filing for involuntary insolvency proceedings against a debtor in systematic default
What's included in our service
- Insolvency diagnosis and analysis of available options: pre-insolvency restructuring, composition, or liquidation
- Preparation and filing of the voluntary insolvency petition before the Mercantile Court
- Coordination with the court-appointed insolvency administrator (administrador concursal)
- Drafting and negotiation of the composition agreement with the body of creditors
- Full accounting support: asset and liability inventory, insolvency financial statements
- Management of tax obligations throughout the insolvency proceedings
- Support during the orderly liquidation process if a composition agreement is not viable
Documentation you will need to provide
- Annual accounts for the last three financial years and an up-to-date balance sheet
- List of creditors with amounts, seniority, and classification (ordinary, privileged, subordinated)
- Schedule of the company's assets and rights with approximate valuations
- Current contracts with key customers and suppliers
- Recent tax returns and any outstanding debts owed to the Tax Agency or Social Security
Key deadlines
- Obligation to file for insolvency: within 2 months of becoming aware of the insolvency situation
- The Mercantile Court must rule on the filing within 5 working days
- The composition agreement must be put to the creditors' meeting before 1 year has elapsed since the declaration
- The liquidation phase begins if no composition is approved or if the company fails to meet its composition obligations
Why GCT1
- Integrated legal, accounting, and tax team: corporate insolvency requires simultaneous decisions across all three disciplines — a siloed approach creates gaps that cost time and money
- Experience with insolvency proceedings before the Mercantile Courts in Alicante
- Early coordination with the insolvency administrator for an efficient and credible procedure
- Free first consultation to assess the situation and review the options available before deadlines begin to bite
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Frequently asked questions
- When is a company required to file for insolvency proceedings?
- As a general rule, the law sets a two-month window from the point at which the director knows or should have known of the insolvency. There are pre-insolvency mechanisms (court communication) that can temporarily suspend that duty. Failing to file when required can result in the proceedings being classified as culpable, with personal consequences for directors.
- Does insolvency always mean the company closes?
- No. Proceedings can be resolved through a creditors' agreement that allows the company to continue trading with a debt reduction and/or payment deferral. Liquidation only occurs if no agreement is reached or if the company is no longer viable; the aim of the process is to resolve the debt as efficiently as possible.
- What personal liability does a company director face in insolvency?
- Directors are legally required to file in time and to cooperate with the insolvency administrator. If the proceedings are classified as culpable — for failing to file on time or for worsening the insolvency — the director may be held personally liable for debts not covered by the insolvency estate.
- How long do insolvency proceedings take?
- Proceedings resolved by agreement can close in around a year if creditors agree. Liquidation takes longer depending on the complexity of the assets and the number of creditors. Well-ordered accounting and legal documentation from the outset is the factor that most accelerates the process.
Let's talk about your case
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