{"id":22252,"date":"2026-10-26T17:32:25","date_gmt":"2026-10-26T16:32:25","guid":{"rendered":"https:\/\/belzuz.com\/?post_type=publicacion&p=22252"},"modified":"2026-10-27T12:27:21","modified_gmt":"2026-10-27T11:27:21","slug":"managing-employees-insolvency","status":"publish","type":"publicacion","link":"https:\/\/belzuz.com\/en\/publicacion\/managing-employees-insolvency\/","title":{"rendered":"Managing employees during insolvency proceedings: continuity of employment and collective procedures"},"content":{"rendered":"

At Belzuz Abogados, S.L.P.<\/a>, as employment lawyers with expertise in managing insolvency-related procedures, we examine the different situations that may arise in relation to a company\u2019s employees after a commercial court has declared the company insolvent.<\/p>\n

A declaration of insolvency by a commercial court does not, in itself, entail the cessation of business activity or the termination of employment relationships.<\/p>\n

What does change is the management framework: following the declaration, the company\u2019s management is supervised or replaced by an insolvency administrator, and any collective employment decision (redundancies, suspensions or substantial changes) is processed through a specific procedure within the insolvency proceedings themselves, with the commercial court judge acting as the competent authority.<\/p>\n

In this context, the proper management of employees and employment obligations is particularly important. It is therefore useful to examine and take into account certain issues relating to workforce management. Accordingly, the Employment Law Department<\/a> of Belzuz Abogados, S.L.P.<\/a> analyses and comments below on various scenarios that may arise following a declaration of insolvency, together with their implications:<\/p>\n

1. Maintaining the employment relationship:<\/h2>\n

For as long as employees remain employed and continue to perform their work, companies are required to pay them for the services provided and to comply with their social security contribution obligations. As a general rule, existing employment terms and conditions remain in place, unless specific measures are adopted and\/or procedures such as those described in the following sections are initiated.<\/p>\n

2. Collective procedures within insolvency proceedings: collective redundancies, suspension of employment contracts and ERTEs, and changes to terms and conditions:<\/h2>\n

Collective redundancies:<\/h3>\n

Collective redundancies within insolvency proceedings involve the termination of multiple employment contracts on economic, technical, organisational or production-related grounds (ETOP). Once insolvency has been declared, these collective measures are subject to the special provisions laid down in Articles 169 et seq. of the Consolidated Text of the Insolvency Act (TRLC), without prejudice to the supplementary application of employment legislation, as provided for in Article 169 of the TRLC itself.<\/p>\n

The application may be submitted by the debtor, the insolvency administrator or the employees\u2019 legal representatives. The insolvency court judge has jurisdiction to decide on the measure, pursuant to Articles 171 et seq. of the TRLC. The procedure also includes a consultation period with employee representatives, on the terms laid down in insolvency and employment legislation.<\/p>\n