Many companies go through periods of corporate insolvency without realising that insolvency proceedings can be a legal tool to protect them from attachments, court claims and the personal liability of directors.
At BUFET GÓMEZ FERRÉ, as insolvency lawyers in Barcelona, we explain how this procedure works and when it must be filed, enabling you to make informed decisions to preserve business continuity and protect your interests.
What are insolvency proceedings and when must they be filed?
Insolvency proceedings are a legal mechanism designed for companies and individuals who are unable to meet their financial obligations on a regular basis. More than a court formality, they are an opportunity to restore financial order, protect business activity and explore solutions that allow the business to continue or, if no other option exists, to carry out an orderly liquidation.
If you are a director of a company in a situation of corporate insolvency, you are legally required to file for insolvency within a statutory period of 2 months from the moment you become aware that debts can no longer be met. Failure to act in time may result in compulsory insolvency proceedings, initiated by creditors or shareholders, with possible consequences of personal liability.
Recognising the warning signs in time is essential to act prudently and protect both your assets and those of the company:
- Repeated non-payment to suppliers and collaborators.
- Court-ordered attachments or threats of asset enforcement.
- Delays in the payment of taxes or Social Security contributions.
- Debt levels exceeding the company’s ability to pay.
- Difficulty obtaining financing or additional credit.
Acting swiftly when these signs appear can prevent legal complications and open the door to strategic solutions such as claims against creditors, refinancing agreements or the protection offered by insolvency proceedings to maintain business activity.
Difference between voluntary and compulsory insolvency proceedings
Knowing which type of insolvency proceedings applies can make a decisive difference when it comes to protecting your company and making strategic decisions.
In voluntary insolvency proceedings, the company itself acknowledges its insolvency situation and files proactively, allowing debts to be organised, negotiations with creditors of an insolvent company to take place, and business activity to continue with greater control. It also demonstrates responsibility towards the law and the company’s partners.
By contrast, compulsory insolvency proceedings begin when creditors apply for a court declaration because the company has failed to act in time. This route may lead to more serious consequences for directors, including personal liability for the company’s debts.
How can insolvency proceedings help you?
The insolvency proceedings for companies offer multiple practical benefits that protect both the company and its directors against claims and legal risks. The main advantages include:
Key stages of the procedure
The insolvency proceedings process is structured into several stages that ensure an orderly and transparent management of insolvency:
- 1. Court declaration of insolvency and appointment of the insolvency practitioner
The court examines the insolvency situation and appoints an insolvency practitioner, who is responsible for liaising with the creditors of the insolvent company and overseeing the management of the company throughout the entire process.
- 2. Review of debts and proposal of a composition or liquidation
Creditors are identified, outstanding debts are assessed, and a proposal for an insolvency agreement is prepared to restructure payments or, failing that, an orderly liquidation of assets.
- 3. Debt discharge for self-employed individuals (Second Chance)
Directors who are natural persons may access legal mechanisms that allow them to benefit from the Second Chance scheme, making it possible to be released from debt under specific legal conditions and to make a fresh start with legal certainty.
Depending on the company’s specific situation, with the proper analysis and guidance of an insolvency lawyer, it is possible to design a tailored action plan, negotiate with creditors and, in certain cases, assess whether it is feasible to apply for the Second Chance mechanism to obtain debt relief.
What risks do directors face?
In situations of corporate insolvency, acting late or without a strategy can jeopardise the company’s future and even the personal assets of its directors. The Insolvency Act requires diligence, and failure to comply with legal obligations may lead to serious consequences:
- Culpable insolvency: if proceedings are filed late or in bad faith, directors may be declared liable and held personally responsible with their own assets.
- Personal liability: the court may order directors to respond with their personal assets for the company’s debts.
- Disqualification from managing other companies in the future.
The good news is that these situations can be avoided with specialised legal advice. For companies seeking protection against third-party claims, relying on services such as insolvency defence and claims against directors for unpaid debts can help demonstrate that actions were taken diligently, meeting legal deadlines and obligations without unnecessary risks.
Why hire a lawyer specialised in insolvency proceedings?
Having an insolvency lawyer by your side is essential when a company enters a situation of insolvency or anticipates payment difficulties. In addition to managing the entire procedure with legal certainty, a specialist in insolvency and commercial law can:
- Provide immediate protection against attachments and creditor claims.
- Negotiate realistic solutions with suppliers, financial institutions and employees.
- Increase the chances of business continuity, avoiding a premature shutdown.
- Reduce the financial and reputational impact of insolvency proceedings.
- Ensure compliance with statutory deadlines and legal requirements, protecting directors from personal liability.
If your company is facing financial difficulties or expects to be unable to meet its short-term obligations, obtaining professional advice from the outset can make the difference between an orderly recovery and irreversible liquidation.
Frequently Asked Questions
It depends on the complexity and the type of proceedings; cases may last from 6 months to several years if there are disputes or complex liquidations.
Yes, if it is viable, business activity may continue while an agreement with creditors is negotiated within the framework of insolvency proceedings.
The company must comply with its labour obligations; employees have priority status as claims against the estate.
Yes, all debts, including tax and Social Security liabilities, form part of the insolvency proceedings and are managed in accordance with current regulations, with deferrals or write-offs being negotiable depending on the case.
Yes. The declaration of insolvency proceedings suspends attachments, interest accrual and enforcement actions, helping to protect assets and stabilise the financial situation.
Complete accounting and financial records, outstanding contracts, an inventory of assets and liabilities, and any information that enables the insolvency practitioner to assess the company’s actual situation. If you wish, BUFET GÓMEZ FERRÉ can assist you and indicate all the required documentation.
Free legal consultation – Insolvency lawyer in Barcelona
If your company is experiencing financial difficulties, you may request a free consultation with our expert insolvency lawyers in Barcelona.
We analyse your case thoroughly, assess risks and guide you step by step to protect your company’s interests and manage debt in an orderly manner. At Bufet Gómez Ferré we provide professional advice tailored to each situation, ensuring practical solutions and protection against claims from creditors of insolvent companies.
We work with fees adapted to the client’s circumstances and with full transparency, so you can make decisions with the peace of mind of being supported by a team specialised in insolvency and commercial law.