Spain | Insolvency proceedings: a useful mechanism but that still has room for improvement

Summary

A sound system that enables corporate restructurings and insolvencies to be managed quickly and efficiently, that strives to help viable companies stay afloat and ensures that creditors' and debtors’ rights are protected, is key to a country's financial stability.

Key points

• Key points:
• Currently, with the adverse effects of the COVID-19 crisis on companies' financial situation, these procedures are becoming even more relevant.
• Delaying the decision to restructure debts or liquidate non-viable companies should not be an option, as it only makes the problem bigger.
• The Spanish insolvency procedure is inefficient and excessively long, which is at least partly due to the collapse of the Mercantile Courts responsible for managing these procedures. In addition, the system does not appeal to individuals and owners of small and medium-sized enterprises and microbusinesses.
• It would be interesting to make several improvements to the Spanish insolvency procedure so it is more efficient and to prevent it from being seen as a last resort, in which case it is much more likely that the receivership will lead to the liquidation of the company, which is precisely what is trying to be avoided.

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