Since 1994, we´ve worked hand in hand with SME´s and family companies. During these three decades, we have gone through major crises, but what we´re witnessing during 2025 is unprecedented. It is the quiet unravelling of the Spanish business fabric.
According to the College of Registrars, 15,384 debtors filed for insolvency in Spain during the first quarter of 2025: an 87.6% increase compared to the same period in 2024. This figure includes both companies and people with no business activity. Out of these, only 1,666 are legal persons, and 1,686 are self-employed people. The rest are individuals with personal debts.
This figure includes both companies and individuals without business activity. Of these, only 1,666 are incorporated businesses and 1,686 are self-employed professionals. The remaining cases involve private individuals with personal debts, unpaid mortgages, or consumer loans.
If we focus on corporate insolvencies alone, the first quarter saw approximately 4,926 proceedings, and the first half ended with nearly 10,000 insolvencies, marking a historical record. This is the worst figure since 2013, when we were in the middle of a recession, and it is worse than during the pandemic.
The really worrying issue is the make-up of these insolvencies: between 60 and 70% are what we call “assetless insolvencies”, i.e. they involve companies with no assets or payment capacity, with creditors unlikely to recover anything.
The landscape
In terms of corporate insolvencies in the first half, Catalonia is leading with approximately 1,550 proceedings, followed by Madrid (1,100), Andalusia (900) and Valencia (850). By sectors, commerce leads, with 26.3% of insolvent companies from this sector. Constrution (14.4%) and manufacturing (13.2%) follow. In hospitality, 62.3% of companies are less than four years old.
The most significant year-on-year increases were recorded in the Balearic Islands, Navarre, and Castile and León, with rises ranging between 80 and 100%, indicating that the crisis is systemic rather than localised.
Structural reasons
Four factors converge in this perfect storm:
First, the end of extraordinary support measures. The accounting moratorium expired on December 31, 2024, forcing companies with negative equity to take action or expose their directors to personal liability.
Second, the tightening of credit. The ECB´s policies have brutally impacted the cost of financing, smothering the liquidity of otherwise viable companies. For an SME with tight margins, whether Euribor is set at 0% or 4% can be a matter of survival.
Third, cost pressures. Energy, raw materials, salaries: everything has gone up, eroding margins to unsustainable levels.
Fourth, the paradox of the insolvency reform. Law 16/2022 made it easier to file for insolvency, increasing the judicialisation of insolvencies which would have previously been resolved informally, or with the quiet winding up of the business.
Coface´s report from October 3 confirms that insolvencies remain 29.4% above pre-pandemic levels. An unsustainable contradiction: how can the economy be growing while businesses are disappearing at this rate? The answer lies in the fact that growth is concentrated in large corporations and specific sectors, while traditional SMEs continue to suffer a steady decline.
Prevention, not cure
At Confianz, our experience tells us that most insolvencies are preventable if early action is taken. The problem is that companies only seek advice when it´s too late- when there is no way back, when there are no assets left to preserve.
The 2022 reform introduced restructuring plans as the cornerstone of the preventive system. These plans allow companies to negotiate with creditors before entering insolvency proceedings, offering decisive advantages: flexibility to modify debt, the ability to bind dissenting creditors, protection during negotiations (including up to four months of suspension of enforcement actions), and the avoidance of the stigma associated with insolvency.
The first step must be a rigorous viability analysis: Does the company have a sustainable business model? Is the problem financial or operational? Are there realistic measures to restore profitability?
If the company is viable, then every day without action is a day lost. A business that could have been saved in January with a restructuring plan may find that by June, insolvency proceedings are the only option left.
What companies must do now
Five specific recommendations:
- Continuous financial monitoring: Implement monthly reporting of cash flow, debt, and financial ratios, with updated projections for the next 12 months.
- Stress testing: Expose your business plan to adverse scenarios before they occur. What happens if sales drop by 20%? What if the Euribor rises another point?
- Preventive dialogue with creditors: Talk before defaulting, not after. Transparency is your best ally. A creditor who sees proactive management will be more willing to negotiate.
- Early specialised advice: The sooner you seek multidisciplinary professional help (legal, financial, operational), the more options you’ll have on the table. The cost of preventive consulting is only a fraction of the cost of a poorly managed insolvency process.
- Rigorous documentation: You’ll need to demonstrate viability with solid business plans, detailed financial projections, and independent valuation reports.
The urgency to act
Current projections offer little reason for optimism. If the pace of the first half of the year continues, 2025 could end with around 20,000 corporate insolvency filings. If interest rates remain high or Europe enters a recession, we could see even higher figures in 2026. The risk is a domino effect: companies that go bankrupt stop paying their suppliers, who in turn face financial distress.
But there is also hope. The tools exist. The legal framework has never been more favourable for preventive restructurings. What’s missing is timely action.
The challenge for the professional community of legal, financial, and strategic advisors is twofold: first, to detect warning signs at an early stage; second, to design solutions that balance the interests of all parties involved. Ultimately, the difference between a successful restructuring and a value-destroying liquidation often lies in timing and execution quality.
For 30 years, we have been helping family-owned businesses to overcome crises, restructure, and endure. We know that with determination, rigour and the right advice, many of the companies struggling today can recover and move forward.
