Best Restructuring & Insolvency Lawyers in Madrid

About Restructuring & Insolvency Law in Madrid, Spain

Restructuring and Insolvency law in Madrid, as throughout Spain, is designed to assist companies and individuals facing financial distress. The main purpose is to provide legal avenues for the orderly resolution of financial difficulties, either by restructuring debts and operations to allow for recovery or, if that is not possible, managing the fair distribution of assets among creditors in insolvency proceedings. Spanish insolvency law has undergone significant reforms, especially with the implementation of the Revised Insolvency Act (Texto Refundido de la Ley Concursal) and alignment with EU directives. These laws apply to both domestic and foreign entities with business interests in Madrid.

Why You May Need a Lawyer

Dealing with financial difficulties can be complex and stressful. In Madrid, there are several situations where seeking legal advice in restructuring and insolvency can be crucial:

• Your business is struggling to pay its debts and wants to negotiate with creditors to avoid bankruptcy.
• You are an individual unable to meet ongoing financial obligations and considering a "second chance" debt relief process.
• A creditor has filed for insolvency proceedings against you or your company.
• You need guidance on how to maximize asset protection or recover debts as a creditor.
• You want to understand how insolvency impacts employment contracts, ongoing contracts, or business operations.

An experienced lawyer can help you evaluate your options, represent your interests in negotiations or court, and ensure compliance with local regulations, minimizing the risk of personal liability or loss of company assets.

Local Laws Overview

The central piece of legislation is the Spanish Insolvency Act (Ley Concursal), which applies throughout Spain, including in Madrid. Key points include:

• Insolvency proceedings (Concurso de Acreedores) are handled by commercial courts in Madrid. Individuals or companies may voluntarily petition for insolvency or creditors may initiate proceedings.
• Pre-insolvency measures, such as restructuring plans or out-of-court agreements (Acuerdos de Refinanciación), allow debtors to negotiate with creditors before formal insolvency is declared.
• The Spanish system distinguishes between voluntary and involuntary insolvency, and between insolvency in fact (de facto) and imminent insolvency.
• Directors have a legal duty to declare insolvency within two months of becoming aware of insolvency status, to avoid personal liability.
• The law includes special provisions for micro-enterprises and simplified procedures for certain cases.
• The "fresh start" mechanism (Segunda Oportunidad) allows individuals, under certain conditions, to be released from remaining debts after liquidation.

Local practices are guided by Madrid’s Commercial Courts, with some procedural nuances, but the underlying framework is unified across Spain.

Frequently Asked Questions

What is the main difference between restructuring and insolvency?

Restructuring is an effort to reorganize a company's finances or operations to avoid insolvency, often done through agreements with creditors. Insolvency is a legal status where an individual or company cannot pay their debts as they come due, leading to formal proceedings.

What are the early signs that my company in Madrid might need restructuring?

Key indicators include ongoing cash flow problems, increasing debt levels, inability to pay suppliers, or breach of loan agreements. Early legal advice is vital to avoid potential insolvency.

When should I file for insolvency in Madrid?

By law, you must file within two months of becoming aware that you are unable to meet your debts regularly. Failure to do so may result in personal liability for directors.

Can individuals access insolvency procedures in Spain?

Yes, individuals can access insolvency proceedings. There are also special mechanisms for individuals called the "second chance" procedure, which provides for debt relief under certain conditions.

Are out-of-court restructuring agreements possible?

Yes, Spanish law allows for out-of-court refinancing agreements and restructuring plans with creditors, often as a first step before formal insolvency is declared.

What happens to employees during insolvency?

Employment contracts usually remain in force unless the court authorizes dismissals or modifications. Employees’ claims have preferential status in the insolvency process.

What are the risks for company directors during insolvency?

If directors delay filing for insolvency or behave negligently, they may be held personally liable for company debts or even face criminal responsibility for fraudulent conduct.

How long does an insolvency process take in Madrid?

The timeline varies greatly. A simple liquidation can take several months, whereas complex cases involving many creditors or assets may last years.

Can foreign companies access insolvency proceedings in Madrid?

Yes, if they have an establishment or significant operations in Madrid, Spanish courts can take jurisdiction over their insolvency.

What is the priority of creditor payments in Spanish insolvency?

Spanish law sets a strict order: secured creditors (such as mortgage holders) are paid first, followed by preferential creditors (like employees and tax authorities), then ordinary and subordinated creditors last.

Additional Resources

If you need more information or assistance on restructuring and insolvency in Madrid, consider these trusted resources:

• Madrid Commercial Courts (Juzgados de lo Mercantil de Madrid): Handle insolvency and restructuring cases within Madrid.
• Official State Gazette (Boletín Oficial del Estado - BOE): Publishes updates to legislation and public notices on insolvency proceedings.
• General Council of Spanish Lawyers (Consejo General de la Abogacía Española): Directory of qualified lawyers and legal advice services.
• Spanish Insolvency Practitioners Association (ASPAC): Professional body for insolvency administrators and practitioners.
• Ministry of Justice of Spain (Ministerio de Justicia): Provides legal information and resources for individuals and companies.

Next Steps

If you are facing financial difficulties or require legal advice about restructuring or insolvency in Madrid, here are important steps to follow:

1. Act promptly if you suspect imminent insolvency - early intervention often produces the best outcomes.
2. Gather relevant financial documents, including debt schedules, contracts, and recent accounts.
3. Reach out to a specialist lawyer in restructuring and insolvency law to discuss your options and obligations.
4. Consider whether out-of-court solutions, such as refinancing or restructuring plans, are viable before entering formal insolvency.
5. Follow the lawyer’s legal guidance to ensure compliance with all procedural and disclosure requirements, protecting yourself from additional liability.
6. Continuously monitor legal developments and court deadlines to ensure your interests are safeguarded.

Professional legal advice is essential in restructuring and insolvency matters. A local lawyer can help you navigate the process, protect your rights, and identify the best strategy for your specific situation in Madrid.