brief

Companies in receivership: an investment opportunity in Catalonia

Catalonia is an interesting spot for foreign investors for many reasons, its location, its access to international markets its talent or its cost-competitive conditions. New investment opportunities arise from purchasing companies in receivership. Having a long-standing industrial tradition, a powerful know how, many of these companies offer an open door for foreign enterprises looking for a strong market position in Catalonia.

A legal framework intended to protect business activities

The spanish bankruptcy law (which took effect on september 2004) allows the acquisition of companies in receivership so that their activity can be preserved and that they have new growing chances. 

Until 2011, the practical application of the law had 95% of companies in receivership ending in liquidation. but between 2012 and 2013 there was an increase in productive units sales as an alternative to closing the business, thanks to examples such as Cacaolat, Fagor or Sati. The Catalan Government and the mercantile courts reached an agreement in 2013 to work together so as to improve the procedure and consolidate sales. 

This new perspective values adjudication criteria, assessment and business plans. processes are public and value all interests, as well as they guarantee the maximum competiveness. The collaboration between the Government of Catalonia and the mercantile courts, who regularly inform the institutions about companies in receivership, is clue to discover new opportunities for buying companies. The Generalitat aims to foster business activities, keep jobs and satisfy the creditors.

Benefits for buying companies

Buying companies in receivership has several benefits for foreign investors. It is a perfect way to enter the catalan market or to expand a company’s presence when it is already established in the country, as it can benefit from an already existing basis. This includes know-how, products and/or services, employees, partners, suppliers, clients and infrastructures from the company they are buying. buying companies may also benefit from a strong market position or a solid brand.

The Catalan Government has always been business friendly and it encourages foreign investment to purchase companies in receivership, offering all possible options to them. Catalonia’s directorate general for industry can also make contacts with foreign investors interested in purchasing or participating in those firms in order to save them and take advantage of their expertise and talented workers.

Benefits for the catalan economy

The Catalan Government is strongly focused on maintaining the industrial activities responsible for most of its gdp and innovation. In fact, the catalan foreign investment attraction department has an aftercare program, which monitors the activity of those foreign companies already established in catalonia. The Generalitat also plays an important role in finding creative solutions for the company’s activity to be saved. 

The results speak for themselves: the selling of productive units in receivership has guaranteed the preservation of 3,819 jobs (75% of those in danger) in the last two years in catalonia and has stopped 129 companies from closing.

Industrial examples in catalonia

Industrial sectors featuring more sales in bankrupt productive units are the metallurgical, electrical and electronic equipment, wood and rubber products. As for companies’ sizes, half of those which have been sold were small firms, while 32% were microenterprises. Those have been bought by spanish firms in 55% of the cases, while 11% were foreign buyers. In other examples, the buyers were industrial or financial funds (14%) or an internal solution was found (20%).

Some success stories

  • Chemence:
    the american enterprise has bought mediaflex’s productive units so that 173 jobs could be saved. Mediaflex is a manufacturer of the packaging industry based in Sant Just Desvern.
  • The Fordahl Capital:
    the investment group purchased ecler laboratorio de electroacústica, an electronics manufacturer, and it saved the 33 employees it had when it fell in receivership.
  • Motovario
    the italian provider of power transmission products decided to purchase what then was Pujol Muntala, S.A, a company in receivership, and created Gear Solutions ES, S.L. they saved its 78 employees and earned a new production plant.