How can I get my claim repaid through necessary insolvency filing in Spain?
If you google “Concurso necesario en España” (necessary insolvency filing in Spain), you won’t get many results. In fact, statistics clearly show that most insolvency proceedings in Spain are voluntary insolvency filings, initiated by the debtor. Necessary insolvency filing (concurso necesario) in Spain is an insolvency procedure reserved for diligent creditors that allows them to obtain substantial benefits.
Purpose of necessary insolvency filing in Spain
The aim of necessary insolvency filing in Spain is twofold: on the one hand it allows the creditor to begin the insolvency procedure before the debtor has had the chance to “organize” its own assets. Likewise, necessary insolvency filings may also include management liability proceedings, an internal process to petition the Judge to determine and rule on the liability of the debtor’s management in the causing of the debtor’s liability. If the management hasn’t filed for voluntary insolvency and the debtor is later declared insolvent, it is likely that management will be held liable and required to use personal assets to repay the company’s debts.
Main advantages necessary insolvency proceedings
First of all, to oppose to the necessary insolvency filing, the debtor must provide a guarantee equivalent to the amount of the creditor’s claim. This aims to prioritize repayment of debt from the very beginning. If the debtor can’t repay the debt in a timely manner, the debtor will be declared insolvent and the creditor’s claim will be automatically recognized in the procedure. Secondly, once the debtor’s insolvency has been confirmed, 50% of the creditor’s claim will be classified as a privileged claim, which means that the diligent creditor is in a better situation than other creditors. If you have any doubts or would like more information on necessary insolvency filing in Spain or insolvency proceedings in general, contact us. We will be happy to assist you.