In recent years, the insolvency system in Spain has undergone significant changes that seek to adapt. In 2023, 21,298 insolvency proceedings were registered, and this year a significant increase is expected, reaching 33,623 insolvency proceedings, according to data from the General Council of Economists. This increase represents a 25% increase in corporate insolvencies and a 75% increase in individual insolvencies. These figures highlight not only the current economic challenges, but also the urgency of modernising and strengthening the system to ensure a safer and more dynamic environment.
Bankruptcy proceedings and the situation of micro-enterprises
In Spain, 81.5% of insolvencies are «insolvencies without mass», i.e. they lack sufficient assets to cover the costs of the process. i.e. they lack sufficient assets to cover the costs of the process. In these cases, the figure of the insolvency administrator is not mandatory, unless it is requested by a creditor, which is rarely the case. This situation raises doubts about the effectiveness of the proceedings in ensuring fairness and legal certainty for all parties involved.
The electronic procedure for micro-enterprises, an innovation designed to streamline these processes, has had a low take-up. This could be due to technical barriers, lack of knowledge or lack of confidence in its effectiveness. Given that microenterprises represent a fundamental part of the Spanish business fabric, it is crucial to promote and facilitate access to these procedures, ensuring greater equity and efficiency.
An added challenge is the lack of updating of insolvency administrators’ fees, which have not been adjusted to the CPI for 20 years. This not only discourages new professionals from entering the sector, but has also led to a decrease in the number of active administrators. This aspect is key to the sustainability of the system and deserves priority attention in future reforms.
Restructuring plans
Restructuring plans have been one of the great bets of the Consolidated Text of the Insolvency Act. This pre-bankruptcy tool allows companies to renegotiate their debts and avoid insolvency. Although its use is growing, it is still limited, especially among small and medium-sized enterprises (SMEs).
Restructuring plans not only benefit companies by allowing them to maintain their operational activity, but also have a positive impact on the economy by reducing unemployment rates and maintaining growth assets. However, for this tool to serve its purpose, it is necessary to simplify the associated processes and to increase outreach to companies that could benefit from it.
The future of the insolvency system in Spain
The insolvency system must evolve to adapt to the new economic and social challenges. One of the fundamental pillars is the professionalisation of insolvency administrators. Ensuring that these professionals have continuous training in legal, economic and management areas is essential to ensure transparent and efficient processes.
In addition, the new Insolvency Administration Regulation is expected to introduce significant improvements. This text could address issues such as the updating of fees, the regulation of access to the profession and the more efficient management of resources in insolvency proceedings. The possibility of converting insolvency administration firms into professional partnerships is also being considered, which could improve the quality and efficiency of case management.
An opportunity to build a stronger system
The increase in insolvency proceedings is a reflection of the current economic challenges, but it also presents an opportunity to improve the insolvency system in Spain. Tools such as restructuring plans, the digitalisation of processes and the professionalisation of insolvency administrators can make a big difference in the way companies deal with insolvency situations.
At Confianz, we work to offer customised solutions to help companies overcome these challenges. From advising on restructuring plans to the comprehensive management of bankruptcy proceedings, we are committed to protecting our clients’ assets and ensuring their business continuity.