Selling a company is already a big decision. But if that company is in debt... things get even more interesting, don’t they? Many business owners, freelancers or shareholders ask themselves this very question when finances start to tighten. Can you sell a company that has debts? Is it legal? What are the risks? And what happens afterwards?

In this article, we’ll walk you through everything you need to know, honestly and clearly, so you can make an informed decision. Because yes, it is possible to sell a company with debts in Spain, but there are some key things you should understand before taking the leap.

Is It Legal to Sell a Company in Debt in Spain?

Yes, absolutely. In Spain, there’s no law that prevents you from selling a company simply because it has outstanding debts. That said, it doesn't mean you can do whatever you like. Selling a business with liabilities is legal, but it’s also a bit tricky from a legal and tax perspective.

Current Laws and the Buyer’s Rights

The most important factor here is transparency. The law protects the buyer if the seller is found to have hidden relevant information about the company’s financial situation. Specifically, the Civil Code, the Companies Act and the Insolvency Law regulate these kinds of transactions. If hidden debts are discovered after the sale, the buyer may take legal action.

So if you’re thinking of selling a company with debts, make sure everything is clearly documented. Don’t try to hide unpaid invoices, forgotten loans or off-the-record commitments. That can easily backfire on you, and with interest.

Difference Between Selling Assets and Selling the Company

This is a key point. There are two main ways to sell a business:

• Asset sale: You sell specific elements of the business (equipment, customer list, contracts) but not the debts.

• Share sale: You sell the entire company, including its legal identity, accounting records, history... and its debts.

The second option is riskier for the buyer, so the valuation is usually lower and the terms more strict. But if you’re looking to completely walk away from the business, it may be the better choice.

Risks and Responsibilities After the Sale

Things don’t necessarily end when the contract is signed. In fact, sometimes the most complicated part starts afterwards. If you’re planning to sell a company in debt, it’s essential to understand what risks you might still be exposed to.

Who Takes On the Debts: Buyer or Seller?

In most cases, if you sell the whole company, the buyer takes on the existing debts. But it all depends on how the contract is written. You can include clauses that limit liabilities or split responsibility depending on the origin of the debt.

Here’s a simple example: say you sell your company to another entrepreneur. If there’s no clause saying otherwise, the buyer assumes the debts shown in the financial statements. But if a hidden debt surfaces later, they could come after you.

Situations Where the Previous Owner Remains Liable

There are some exceptions. For example:

• Debts with the tax authority or social security if there’s a transfer of business.

• Employee claims if the activity continues under the new owner.

• Personal guarantees or loans, which don’t disappear automatically upon sale.

So be very careful about what you sign. Always get advice from a lawyer who specialises in this type of deal.

Viable Options If Your Company Is in Debt

Selling isn’t always the only way out. And it’s not always the best option either. If your business is struggling financially but still has potential, there are alternatives you should consider.

Restructuring Before the Sale

It might not be the right time to sell just yet. Sometimes it’s better to renegotiate your debts, reduce costs, improve your margins or find new revenue streams. A company with stabilised finances is far easier to sell, even if some debts remain.

Selling Through a Merger or Acquisition

Another interesting route is to merge with another company or be acquired by a larger group. In these cases, your debts can be absorbed into a bigger structure with more financial muscle. Plus, the buyer is often more willing to take on risk if there are clear synergies.

Liquidation and Winding Up

If the business is no longer viable, it may be more appropriate to liquidate the company in an orderly way. Yes, it’s a hard step to take, but often it’s more transparent, cleaner and less risky than trying to sell something unviable. Winding down the company correctly can also offer peace of mind and legal protection.

How to Value a Company with Liabilities

Valuing a company in debt isn’t as simple as plugging numbers into a formula. You have to look at the whole picture: assets, liabilities, future prospects, reputation... the lot.

Factors That Affect the Sale Price

Some of the most important ones include:

• The amount and type of debt (bank loans, tax debts, unpaid suppliers...).

• The quality of the assets (loyal customers, proprietary tech, brand value...).

• The expected future profitability.

• The level of risk for the buyer.

You probably won’t get top price. But you can still maximise perceived value with proper preparation.

Tools and Methods to Calculate the Real Value

The most common valuation methods for companies in debt are:

• Net asset value: total assets minus total liabilities.

• Discounted cash flow (DCF): based on projected future income.

• EBITDA multiples, adjusted for liabilities.

The best approach is to get help from a financial advisor who knows how to present your business attractively.

Legal and Tax Tips Before Selling

This isn’t just about numbers. Selling a company with debts involves important legal and tax issues that can come back to bite you if not handled properly.

Why Professional Advice Is Crucial

Don’t do this alone. Seriously. A legal and tax advisor can help you:

• Draft a contract that protects you.

• Estimate the tax consequences of the sale.

• Avoid vague or risky clauses.

And if you don’t know where to begin, the team at Business in Spain can guide you. We’ve helped countless business owners sell their companies (with or without debt) in a secure, profitable and compliant way.

Essential Documents to Avoid Future Issues

You’ll want to have ready:

• An up-to-date, audited balance sheet.

• A full list of assets and liabilities.

• All labour and commercial contracts.

• Proof you’re up to date with taxes and social contributions.

• A legal report on the company’s corporate standing.

Yes, it’s some work, but this is what separates a smooth deal from a legal nightmare.

Conclusion: Is It Worth Selling Your Business with Debts?

Well... it depends. Selling a company with debts is entirely possible, but it’s not a decision to make lightly. There are clear advantages (closing a chapter, reducing mental burden, starting something new) but there are also risks and long-term implications.

Our advice? Pause. Reflect. Get professional support. Then decide whether to restructure, wind down, or go ahead with the sale.

And if you want support at every step, get in touch with us. At Business in Spain, we’ll help you explore your options and find the best path for your business. The decision is yours. But don’t go through it alone.