There are some moments in which a company, for various reasons, is incapable of regularly fulfilling with their obligations, while, at the same time, generating a growing problem.
The Law states that in these situations it is necessary to declare a state of bankruptcy to manage an orderly way out of the problem and ensure the future operation of the company, or if it were impossible to establish any means with which the damages can be reduced to a minimum.
Not taking action at the right time can not only lead to increasingly bigger damage, but it can also lead to potential liability for those in charge of the company if the state of bankruptcy is not requested within the deadline stated by the Law.
According to our experience, the sooner these control measures take place, the lesser the damage suffered to third parties, the company, the employees, the partners, and those responsible.
The state of bankruptcy does not necessarily signify the end of a company, it should be a new beginning. There have been many and great companies who have used this insolvency as a means to fix its situation and grow even more.
Having said that, the subject is complex and requires the intervention of experts who truly know how to face these situations.

In what situations should we request a state of insolvency?

There are various circumstances in which a state of bankruptcy could or should be requested, but, in general terms, they can be summarized in the following groups:

• When a company can not fulfil its obligations: those cases in which the company has an obligation to make certain payments to banks or suppliers and does not possess sufficient liquidity to address these payments.
• When the company has its assets frozen: for whichever reason, either a legal procedure or because of debts, most of the assets of the company are frozen, which prevents the selling of these assets to solve a difficult financial situation.
• Asset stripping or hasty or ruinous liquidations of its assets: in a state of bankruptcy, the creditors of the company are auctioning its assets and are losing them in a disorderly matter and at a ruinous price.
• General non-compliance with certain tax, labor or Social Security debts.

The responsibility of company administrators

Those responsible for the company have an obligation to request the state of bankruptcy and to present it before the Court as soon as one of these situations occurs.
If it is not requested in due form and by the deadline stated by Law, this could result in criminal responsibility and it could lead to them having to pay the debts of the company with their own personal assets.
Withing the Bankruptcy team, we take on these projects with three very clear objectives:

• Avoid any responsibility for the administrator.
• Help with ensuring the continuity and viability of the company by searching for possible agreements with creditors.
• Orderly manage the state of bankruptcy and limit any detriment to providers, employees, partners, and administrators.

We manage states of bankruptcy throughout Spain. You can contact us through the contact form or by calling 952 00 55 24.