Specialized insolvency lawyers in Girona

Insolvency Law in Girona

Insolvency law is the legal field that regulates corporate and personal insolvency situations, aiming to restructure the debts of a company or, in extreme cases, liquidate its assets. We are experts in managing insolvency procedures for both companies and individuals, including the Second Chance Law for both businesses and self-employed individuals. Additionally, we offer specialized services in buying and selling companies and searching for international investors to give struggling businesses a new life.

We are also specialized in the Second Chance Law, a legal procedure designed to cancel debts and allow individuals and self-employed people to start fresh. More information about the Second Chance Law here.

What is a creditors’ bankruptcy?

A creditors’ bankruptcy is a judicial procedure intended to manage insolvency situations for a company or individual. When a company is unable to meet its debts, the bankruptcy allows a range of legal mechanisms to restructure the debt, reorganize the assets, and, if possible, avoid the total liquidation of the company.

The bankruptcy procedure begins when an individual or entity is unable to regularly pay its debts, and the primary goal is to protect both the company and the creditors. In this process, solutions are sought such as reaching an agreement with the creditors to adjust payments according to the company’s capacity. If no agreement is reached, the company’s assets are liquidated to distribute them fairly among the creditors. This ensures that, even if the company cannot continue operating, creditors receive as much as possible of what they are owed.

Creditors’ bankruptcy is a crucial tool for managing insolvency crises and, in many cases, provides the opportunity to safeguard businesses and protect the interests of all parties involved, avoiding the complete or partial collapse of the business.

Types of creditors’ bankruptcy

We can classify creditors’ bankruptcy according to:

Pre-bankruptcy procedure

The pre-bankruptcy is a phase prior to the creditors’ bankruptcy that allows a company or individual, in a state of insolvency or imminent risk of insolvency, to buy time to negotiate with creditors and attempt to avoid a formal bankruptcy declaration. This phase is regulated under Article 583 of the Bankruptcy Law and subsequent articles in Spain, which establishes the requirements and procedures for eligibility.

Objective of pre-bankruptcy
The main objective of pre-bankruptcy is to provide temporary protection for the insolvent company, offering an opportunity to reorganize financially and negotiate agreements with creditors without being immediately immersed in a judicial bankruptcy process. During this period, creditors’ legal actions, such as seizures or executions, are halted, and an extrajudicial solution is sought.

Eligibility for pre-bankruptcy
Pre-bankruptcy can be requested by:

• Legal entities (companies): When they anticipate they won’t be able to meet their debts or are already in imminent insolvency.
• Individuals (self-employed or individuals): Who can prove that their financial situation threatens their ability to pay in the short term.

Duration of pre-bankruptcy
Once requested, the company or individual has three months to negotiate with creditors. During this period, the debtor is protected from legal actions, such as seizures or claims from creditors, in order to reach a viable negotiation. After this period, the debtor has an additional month to file for bankruptcy if no agreement is reached.

Voluntary and involuntary bankruptcy

Article 29 of the Bankruptcy Law defines the two main types of bankruptcy procedures: voluntary bankruptcy and involuntary bankruptcy, which mainly differ depending on who requests the bankruptcy and under which circumstances.

Voluntary Bankruptcy

Voluntary bankruptcy starts when the company or individual in insolvency presents the request before the court. This type of bankruptcy can be requested when the debtor anticipates they won’t be able to meet their debts or is no longer able to comply with payments. Voluntary bankruptcy offers an opportunity to try to save the company through an orderly restructuring under judicial oversight.

Key characteristics of voluntary bankruptcy:

• Initiative of the debtor: The company or individual requests bankruptcy voluntarily before the court.
• Insolvency situation: The request can be made in two situations:
  • Current insolvency: When the debtor can no longer meet their payment obligations regularly.
  • Imminent insolvency: When it is anticipated that payments won’t be met in the near future.
• Management of the company: In voluntary bankruptcy, the debtor continues managing their economic activity under the supervision of the bankruptcy administrator. This means the business can continue operating, but decisions are subject to control to ensure that creditors are not harmed.

Involuntary Bankruptcy

Involuntary bankruptcy differs because it is not initiated by the debtor but by a creditor who seeks to protect their rights against the risk of non-payment. A creditor can request involuntary bankruptcy when they notice the company is not paying its debts, and this ensures judicial intervention to ensure the collection of debts.

Key characteristics of involuntary bankruptcy:

• Initiative of the creditor: A creditor requests the bankruptcy after noticing the debtor is not paying its debts.
• Signs of insolvency: Creditors can request involuntary bankruptcy when it is clear that the company or debtor has stopped paying overdue debts or is not meeting other financial obligations.

Voluntary or Involuntary Bankruptcy

We manage both voluntary bankruptcy requested by the company or individual and involuntary bankruptcy requested by creditors. We ensure that the rights of all parties involved are respected and work to achieve the best possible result.

Liquidation of Companies

When debt restructuring is not viable, we assist in the liquidation of the company, ensuring that the process is done with maximum transparency and in compliance with current legislation. When restructuring debt is not possible, the company proceeds with the liquidation of its assets, as regulated by the Bankruptcy Law.

Our services in insolvency law in Girona

As specialists in insolvency law in Girona, we offer a wide range of services to help businesses and individuals overcome financial difficulties:

Preventive advice in business crises

It is essential to act before the situation becomes irreversible. We conduct a full financial evaluation and advise on implementing restructuring and refinancing measures that can avoid the need to declare bankruptcy. Before resorting to filing for bankruptcy, we offer a series of preventive services aimed at preventing total insolvency and ensuring the continuity of the company. By following the procedures outlined in the Bankruptcy Law (Royal Legislative Decree 1/2020, of May 5), we help businesses restructure their debts and stabilize financially through:

• Negotiation with creditors: We renegotiate the terms of loans and other financial obligations under Articles 596 and following of the Bankruptcy Law, aiming to restructure the debt in a way that allows the business to continue. We work to achieve agreements that include deferments, debt reductions, or refinancing, thus avoiding the formal declaration of bankruptcy and minimizing damage for both creditors and the business.
• Bank refinancing: We negotiate with financial entities to refinance loans based on refinancing agreements regulated under Articles 598 to 608 of the Bankruptcy Law. These agreements can be judicially homologated to ensure they are binding on all financial creditors, avoiding bankruptcy. The goal is to relieve the financial burden and provide sufficient liquidity to ensure long-term viability.
• Viability plans: We prepare viability plans that outline the necessary structural and operational changes to guarantee the financial sustainability of the business. According to Articles 591 to 595 of the Bankruptcy Law, this plan includes an analysis of the company’s current financial situation, debt restructuring proposals, and recommendations for the necessary operational reforms to ensure business continuity. Our objective is to stabilize the company and secure its future before bankruptcy is necessary.
• Pre-bankruptcy restructuring and refinancing: Pre-bankruptcy restructuring and refinancing is a preventive strategy that allows companies in financial difficulty to avoid bankruptcy. It involves a series of actions aimed at reorganizing the company’s debts and financial situation before formal insolvency occurs, ensuring business continuity while also protecting the interests of creditors. This action takes place in the pre-bankruptcy phase, during which the company can negotiate with its creditors under temporary court protection.

Filing for Bankruptcy

If a company or individual is unable to meet their debts, we provide complete assistance in filing for bankruptcy. This includes:

• Preparation of all necessary documentation.
• Legal representation in court.
• Negotiation with creditors to achieve the best possible solution, whether through refinancing agreements, debt reductions, or deferments.

When a company is in an insolvency situation, managing the bankruptcy process effectively is crucial to protect the interests of both creditors and owners while avoiding legal penalties. We specialize in this process regulated by the Bankruptcy Law (Royal Legislative Decree 1/2020, of May 5). We offer comprehensive services that include:

• Filing for bankruptcy: We handle the preparation and filing of all necessary documentation to start the bankruptcy process, ensuring compliance with all legal deadlines, such as submitting the bankruptcy request within two months after the company should be considered insolvent, to avoid possible personal liabilities for administrators.
• Suspension of payments: During the bankruptcy process, we help obtain a temporary suspension of payments under Article 43 of the Bankruptcy Law, which allows the company to avoid creditors initiating enforcement actions against their assets while a solution is being sought. This provides financial breathing space for the company to continue operating while negotiating viable alternatives.
• Debt restructuring: We negotiate with creditors to reach debt restructuring agreements (Articles 308 and following of Royal Legislative Decree 1/2020), allowing deferments, reductions, or other refinancing formulas that ensure the company’s continuity. Our goal is to find the best solution so that the company can continue operating and minimize losses for both owners and creditors.

Voluntary or Involuntary Bankruptcy

We manage both voluntary bankruptcy filed by the company or individual and involuntary bankruptcy requested by creditors. We ensure the rights of all parties involved are respected and work to achieve the best possible result.

Company liquidation

When debt restructuring is not viable, we assist with the liquidation of the company, ensuring that the process is carried out with maximum transparency and compliance with current legislation. When debt restructuring is not possible, the company proceeds with the liquidation of its assets, as regulated by the Bankruptcy Law (Royal Legislative Decree 1/2020, of May 5). This process seeks to satisfy creditors in an orderly and fair manner while protecting the rights of the company’s owners and administrators. We offer comprehensive services to ensure that liquidation is carried out efficiently:

• Liquidation of assets: We manage the orderly sale of business assets, according to Articles 419 to 431 of the Bankruptcy Law. Our goal is to maximize the value of the assets to satisfy creditors, whether through auctions, direct sales, or other methods provided by law. We ensure that this process is transparent and that all legal requirements are met.
• Protection of creditors’ rights: We oversee the entire liquidation process to ensure that creditors receive what they are owed fairly, respecting the principle of par conditio creditorum (equality among creditors), as stipulated in Articles 421 and following of the Bankruptcy Law. We ensure that preferred, ordinary, and subordinated creditors receive their payments according to the legal hierarchy.
• Business closure: In addition to managing the liquidation of assets, we provide legal advice to close the company in an orderly and legal manner, avoiding personal liability for administrators due to poor management or fraudulent administration (Articles 443 to 446 of the Bankruptcy Law). We ensure that the process is carried out in compliance with bankruptcy regulations and that administrators do not face sanctions or legal consequences.

Why choose us as bankruptcy lawyers in Girona?

• Proven experience: We collaborate with lawyers who have decades of experience in managing creditors’ bankruptcies and business restructurings.
• Commitment to our clients: Our goal is to find the best solution for each case, avoiding liquidation whenever possible and ensuring our clients’ interests are protected at all times.
• Personalized assistance: Every insolvency case is unique. That’s why we offer tailored advice based on the specific needs and circumstances of the client, whether a company, individual, or group of companies.
• Transparency and constant communication: We keep our clients informed throughout the bankruptcy process with clear and consistent communication, ensuring they understand their rights and options at every stage.

If your business or you, as a self-employed person or individual, are facing financial difficulties, it’s time to act.

Contact us today to learn how we can help you regain control of your finances or find new investors to revitalize your business. We are here to offer the expert advice and legal support you need to secure your financial future.