Posted in: Case studies
This case study is based on how an agricultural company recovered an unpaid commercial debt Names, product details and identifying information have been fictionalised for illustrative purposes. The original company was European as we can help international businesses recover commercial debts from companies based in Spain.
A Spanish agricultural supplier — which we will call Iberia AgriSystems S.L. — supplied specialist commercial irrigation equipment to an agricultural distribution company, GreenFields Trading S.L.
The products included drip-irrigation systems and agricultural water-management equipment.
The customer received the equipment but failed to pay the full amount due.
A partial payment was made, but a significant balance remained outstanding.
After attempts to obtain payment directly from the customer were unsuccessful, Iberia AgriSystems decided to pursue the outstanding debt through the Spanish courts.
The supplier claimed that €63,037.08 remained outstanding.
The supplier provided documentary evidence demonstrating the commercial transaction.
This included:
The court ultimately found that the documentation was sufficient to establish the underlying obligation and the amount being claimed.
The debtor didn’t respond
GreenFields Trading did not respond to the court proceedings within the required period and did not attend the subsequent hearing.
The court therefore declared the company to be in procedural default.
But this did not mean that the court simply assumed the debt existed.
The judgment specifically explains that default is not, by itself, an admission of the claimant’s allegations. The creditor still has to prove the facts supporting its claim.
In this case, the supplier’s documentary evidence satisfied that requirement.
The court upheld the supplier’s claim and ordered the fictionalised debtor to pay:
€63,037.08 along with the applicable interest arising from the commercial debt and the court costs.
The judgment provided for a right of appeal within 20 days, as usual.
1. Keep a complete paper trail
When a customer doesn’t pay, the strength of the eventual claim can depend heavily on the quality of the records.
That could include:
In the underlying judgment, the court specifically considered evidence concerning the commercial relationship, delivery of the goods and the amount owed. They did not win just because the other side did not respond.
2. Record partial payments carefully
A customer making a partial payment doesn’t necessarily resolve the debt.
In this case study, the customer paid €8,950, while the supplier continued to claim a substantial outstanding balance.
For businesses, keeping a clear account ledger can make it much easier to demonstrate exactly how an outstanding balance has been calculated.
3. Don’t rely on the debtor simply admitting the debt
One of the most useful lessons from the case is that silence isn’t necessarily an admission.
Even though the debtor failed to defend the proceedings, the court still required the supplier to establish its claim.
The creditor therefore needs to build the evidence before going to court.
4. Payment demands create an important record
The supplier had evidence of its attempts to obtain payment and evidence that those demands had been received.
For a business dealing with distributors, contractors or other commercial customers, maintaining a clear record of payment demands can become particularly important if negotiations eventually turn into litigation.
5. A judgment is a major step — but recovery is the objective
Winning a court judgment establishes the creditor’s legal entitlement to the money.
But the ultimate goal isn’t simply obtaining a piece of paper saying that money is owed.
The goal is getting paid.
If the debtor doesn’t voluntarily comply with the judgment, the creditor may need to take further enforcement steps to recover the money.
A first-instance judgment is not necessarily the end of the matter. In Spain, the losing party generally has 20 days from notification of the judgment to lodge an appeal. The appeal must explain the grounds on which the party believes the judgment should be changed.
In our fictional case, GreenFields Trading S.L. could therefore appeal the €63,037.08 judgment in favour of the creditor.
The appeal would move the dispute to the High Courts would review the proceedings. The creditor would have an opportunity to respond to the appeal.
Importantly, however, an appeal does not necessarily mean that the creditor must simply wait for the appeal to conclude before taking any steps to recover the money.
Spanish civil procedure allows certain first-instance monetary judgments to be *provisionally enforced while an appeal is pending*. This means that, depending on the circumstances, the creditor may be able to seek enforcement of the judgment even though the debtor has appealed.
This can be particularly important in commercial debt recovery. A creditor may therefore need to consider two issues at the same time; defending the judgment on appeal and protecting its ability to recover the debt.
If the appeal ultimately confirms the original judgment, the creditor can continue with the appropriate enforcement process. If the judgment is overturned, that would be the end of the case. However, we do not undertake Legal Actions unless we believe there is a very strong chance of winning.
We have helped many International companies recover an unpaid commercial debt when the debtor is based in Spain and have strong expertise in this area. As said above, proof and evidence are very important.