The reform of the Spanish Insolvency Law introduced a specific legal framework and procedure for the purchase and sale of business units within insolvency proceedings.
This reform enables the purchase of a business unit in Spain, benefiting the insolvent company by providing the opportunity to maintain operations and ensure employment stability for its workers.
At the same time, this purchase provides advantages for the buyer, including the opportunity to acquire its assets without the obligation to assume its liabilities (debts and others), except those related to wages, severance payments, and Social Security debts of the affected workers.
The reform transforms productive unit purchases in Spain into a compelling opportunity for domestic and international investors.
Definition of Productive Unit
The Insolvency Law in Spain defines a productive unit as a set of organized resources to exercise a primary or ancillary economic activity. In other words, a productive unit comprises the assets, services, and rights that enable the development of an independent and self-sufficient activity.
Procedure for the Purchase and Sale of Productive Units in Insolvency Proceedings
When the sale of a productive unit occurs within insolvency proceedings, the following phases are identifiable:
Common Phase: Judicial Authorization and Continuity of Operations
In this phase, the insolvency administrator must submit a sale request for authorization by the competent commercial judge. A company filing for insolvency often includes a liquidation plan featuring an offer to sell the business unit.
After assessing whether the transaction supports the continuity of economic activity and job preservation, the judge decides on the disposition of the productive unit.
It is important to note that the judge can authorize the direct sale of one or more productive units at any stage of the insolvency proceedings or if an auction fails.
Judicial authorization of the productive unit sale initiates the liquidation phase.
Agreement Phase
At this stage, the sale of business units is generally not considered, except under specific circumstances outlined in an agreement that may involve the buyer partially assuming the debtor’s insolvency claims and transferring the business unit.
Liquidation Phase
In this phase, once the judge authorizes the sale of the productive unit, the appointed expert must determine the deadline for submitting offers and outline the expected costs until the final award. And ensure that the process maintains transparency and public visibility.
The sale method may be an electronic auction or another approach determined by the judge.
If an offer meets the required criteria and aligns with the interests sought, the judge approves the sale of the business unit.
Another regulated aspect of the sale-purchase of productive units within insolvency proceedings is the content of offers. In Spain, the law requires offers to include at least the following:
- Identification of the bidder, including details on their financial solvency and the human and technical resources they have available
- A detailed description of the assets, rights, contracts, and licenses or authorizations included
- The offered price, payment methods, and any guarantees provided
- The impact of the offer on employees
Purchasing productive units within insolvency proceedings is an attractive strategy for investors interested in acquiring business assets in Spain without inheriting significant liabilities, except for specific labour obligations.
Mariscal Abogados provides comprehensive advice on insolvency law, specifically in the sale-purchase of productive units.
If you need additional information regarding the sale of productive units in insolvency proceedings in Spain,
