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Recovering debt from Spanish companies requires a strategic approach that balances the efficiency of out-of-court settlements with the rigorous formalism of the Spanish judicial system. Following the major 2022 insolvency reforms (Law 16/2022) and the more recent 2025 changes to the judicial system (Organic Law 1/2025 of January 2, on measures for the efficiency of the Public Justice Service), the landscape has shifted toward amicable settlement and preventive restructuring by offering creditors new tools to secure recoveries before a debtor reaches total collapse. The new 2025 changes also aim for effective digitalisation and efficiency in Judicial Recovery.
- Amicable Phase (Recuperación Amistosa)
Amicable recovery remains the preferred first step, resolving approximately 60–65% of debts without court intervention.
The Power of the Burofax. In Spain, a standard letter or an email demanding payment is not enough for formal legal standing. Creditors should use a Burofax, a unique service providing legally certified proof of both delivery and content. A well-drafted Burofax sets a clear payment deadline and serves as essential evidence if the case moves to court. One of the most critical legal functions of a formal demand (like the Burofax) is that it interrupts and resets the five-year statute of limitations for commercial debts.
MASC: Mandatory Pre-Litigation Step
In addition, the recent enactment of Organic Law 1/2025, introduces significant changes regarding the use of MASC (Medios Adecuados de Solución de Controversias – Adequate Means of Dispute Resolution). Effective since April 2025, this law aims to streamline the judicial system and make procedures more agile, transparent, and cost-efficient. It was planned to reduce the heavy workload of the Spanish Courts. It also introduces specific technical amendment to the 2022 Insolvency reform.
Mandatory Attempt: the law now promotes (and in most cases mandates) an attempt at an out-of-court settlement via mediation, conciliation, or neutral expert evaluation before a creditor can initiate a standard judicial trial.
This aligns with the existing practice of using a Burofax but moves it into a more structured ADR (Alternative Dispute Resolution) framework. Failing to prove an attempt at MASC can have devastating and costly procedural consequences or impact the awarding of court costs in later litigation.
Although a lawyer is not required to send a Burofax, professional drafting helps ensure the demand meets judicial standards, which is essential if the matter proceeds to court. In addition, following the 2025 reforms, the demand must include specific elements to comply with MASC requirements.
Recommendation
Under Law 1/2025, international companies should view the “Amicable Phase” not just as a courtesy, but as a procedural necessity. Engaging in a formal MASC process early – supported by a properly drafted Burofax – not only interrupts the statute of limitations but also satisfies the efficiency requirements needed to access the judicial fast-track tools if a settlement is not reached. A Burofax provides legally certified proof of delivery and content and serves as critical evidence if the case moves to court. Electronic versions are the cheapest form but postal delivery with a signature is often preferred as it provides the most solid and powerful evidence in the Spanish judicial proceedings
- Judicial Recovery
If amicable efforts fail, creditors must pivot to judicial recovery (vía judicial) which is very formalistic and requires considerable investment in terms of expense and time.
The cost and time of entering judicial recovery in Spain varies significantly depending on the path taken – whether it is a fast-track payment order, a formal trial, or full insolvency proceeding – and the size of the debtor company. Legal representation is mandatory for any claim exceeding 2,000 EUR (lawyer abogado and court agent procurador).
International Formalities: Foreign creditors must provide a notarized and apostilled Power of Attorney (POA) appointing a lawyer (abogado) and a court agent (procurador). All foreign-language documents (contracts, invoices) must be translated by a sworn translator recognized by the Spanish Ministry of Foreign Affairs.
Digitalization and Efficiency in Judicial Recovery under the 2025 reform.
The 2025 Law introduced a “structural transformation” of the public justice service with a focus on digitalization. Most recovery and insolvency communications are now processed through standardized electronic forms, which are mandatory for professional entities and companies. The law also reinforces the role of specialized commercial courts to handle insolvency and complex commercial recovery cases more efficiently.
In addition, Law 1/2025 introduced specific technical amendments to Law 16/2022. It increased considerably the fees of the insolvency administrator and refined and updated the rules for “Express Insolvency” (insolvency without assets) making the process faster for debtors with minimal or no attachable assets. It also introduced a special procedures for micro-SMEs allowing the court to appoint an administrator at the request of a single creditor in specific scenarios, such as when management powers need to be substituted. The law aims to improve the framework for online auctions of assets aiming to maximize recovery values and increase transparency of the liquidation phase.
- Fast track tool (similar to other jurisdictions’ statutory demand)
The Proceso Monitorio (Summary Order for Payment Procedure) is Spain’s tool for recovering undisputed, liquid, and overdue debts of any amount. It allows a creditor to obtain an enforceable title quickly if the debtor does not oppose the claim.
The process begins with a written petition with the court corresponding to the debtor’s domicile, attaching supporting documents and evidence of the attempted negotiation.
Once the court admits the petition it sends a formal demand to the debtor. The debtor has 20 days to respond; if the debtor fails to respond within the 20 days, the court will issue a decree terminating the process. This decree becomes an enforceable title allowing the creditor to immediately request the seizure of the debtor’s assets. Resolutions ending a monitorio due to payment by the debtor or silence generally do not include a ruling on legal costs.
If the debtor opposes the claim, the process converts into a standard trial. Depending on the amount of the claim it will be Summary Trial (Juicio Verbal for claim with a value of up to 15,000 EUR) which can take 6 to 12 months or an Ordinary Trial (Juicio Ordinario for claims with a value exceeding 15,000 EUR), which can take 12 to 24 months.
- Insolvency under the new 2022 Law
The Spanish legal system categorizes financial distress based on the timing and visibility of a debtor’s inability to meet obligations. Identifying these triggers is critical as they dictate the legal obligations of directors and the ability of specific restructuring tools.
Voluntary vs. Involuntary. A debtor must file for voluntary insolvency within two months of becoming aware of its insolvency (actual insolvency). If a creditor files first due to a default, it is considered involuntary insolvency, which often results in the debtor’s management being replaced by a court-appointed administrator.
If a company is insolvent, and its directors fail to file under the strict two-month window they may be held personally liable for the company’s debts. Reminding directors of this personal risk is a powerful negotiation lever.
After the new 2022 reform a Spanish debtor may notify the court that it has started or intents to start negotiations for a Restructuring plan. This pre-insolvency period provides a safe harbour for debtors to negotiate solutions without the threat of a negligent insolvency declaration of hostile enforcement. The filing has the effect of providing an initial three month period to negotiate (which can be extended by an additional three months, total of six months) if supported by a majority of creditors or a restructuring expert. The legal obligation to file for insolvency and judicial or extra judicial enforcement against necessary assets are temporarily suspended. It will also often void the contractual termination based solely on pre insolvency filling.
Restructuring Plans (The Modern Approach). The 2022 reform introduced “Restructuring Plans,” which allow companies to reorganize when insolvency is merely “likely” (objectively foreseeable within the next two years).
The Cramdown Mechanism: Under the 2022 reform a debtor can push through a restructuring plan even if some creditors dissent provided certain majorities are met. Creditors are grouped into classes based on “common interest”. Insurance companies for credit risk or surety are classified as financial creditors alongside loans, credit facilities and financial leases. If required majorities are met, the court can “cram down” the plan on dissenting creditors or even shareholders, forcing them to accept haircuts or equity swaps. Be aware that the court can rescind any “detrimental” transactions made by the debtor in the two years preceding the insolvency filing (the “suspect period”).
For Micro-enterprises (companies with few workers and low annual turnover) the new law allows for a mandatory procedure aim to reduce the excessive costs and time associated with a standard insolvency (including maximum digitalization, optional insolvency administration and legal representation).
Express insolvency (concurso expres) is a fast tract judicial mechanism specifically designed for micro enterprises, companies and individuals whose attachable assets are non-existent or whose value is significantly less than the estimated costs of the insolvency proceedings. The new 1/2025 Law aimed to refine the process to make it more agile and transparent. If a judge determines that the active mass is evidently insufficient and there is no foreseeable liability action against the directors, the judge can declare the insolvency and conclude the procedure in the same order. This order is publishes in the Spanish Official State Gazette (BOE). To protect creditors from potential fraud or hidden assets the law includes a safeguard allowing creditors holding at least 5% of the total liabilities to request the court to appoint an insolvency administrator. The creditors must fund the administrator fee in this case. The role of the administrator is limited to is merely investigatory (analysing whether there are grounds to initiate claw-back actions, seek director liability, or classify the insolvency as negligent).
- Tracing Assets in Spain
As in any jurisdiction early asset tracing of a debtor should be part of the general recovery strategy. The Mercantile Registry is the best tool to check a debtor’s financial status before incurring the costs of litigation.
In addition, Spain has a public asset tracing tool, the Punto Neutro Judicial (PNJ). This tool is very relevant in the context of tracing asset in the context of insolvency and judicial recoveries. It’s a secure communications network managed by the Spanish General Council of the Judiciary (CGPJ).
It provides courts with real-time information from several key providers (including Spanish Tax Agency, Property Registry and Social Security). The platform is not accessible to the public but once a judicial enforcement phase begins (such as after a Proceso Monitorio is uncontested) the creditor can file a written request to the court asking to conduct a search through the PNJ. If the search successfully identifies bank accounts or other liquid assets electronic attachments (embargo telematico) can be done by the court.
The PNJ system is also used to search for alternative addresses if attempts to serve notifications to a debtor have failed (to avoid having to resort to notification by public deed).
Final thoughts
Spain offers a mature and transparent environment for trade and investment, supported by deep capital markets and established institutions. For exporters, credit insurers, and lenders, it remains a central gateway to regional opportunity.
That said, its sophistication comes with complexity. Market volatility, evolving regulation, and sector-specific liquidity pressures reinforce the importance of approaching transactions with both legal and commercial precision.
Where defaults do occur, effective navigation of Spain’s legal and enforcement framework is key to preserving value and ensuring recoveries are pursued efficiently.
Drawing on local experience and cross border perspective, our team supports these objectives by advising on debt recovery and enforcement should difficulties arise.
Should you require guidance on managing trade credit exposure or recovering payments in Spain, please contact your Case Manager or email L.Varnai@recoveryadvisers.com.
