We analyzed the Resolution of the Directorate General of Registries and Notaries (DGRN) dated August 1, 2016 (published in the BOE on September 23, 2016) which clarifies it.
It is an unavoidable principle of commercial law according to which the liquidation process of a commercial company and its subsequent extinction (with the granting of the corresponding public deed) cannot be completed while the company maintains debts to third parties.
When this circumstance arises, the appropriate channel for achieving this purpose is insolvency proceedings. In such cases, the liquidation process of the company (realization of assets and satisfaction of liabilities, provided the circumstances of the case allow it) will take place within the insolvency proceedings, and once this is completed, the insolvency proceedings may conclude with the dissolution of the company.
However, practice can produce situations that, due to their specific characteristics, may present challenges. This is the case addressed by the DGRN in the aforementioned resolution. It concerns a limited liability company experiencing losses that had reduced its net worth to less than half of its share capital. The shareholders unanimously agreed at a general meeting to dissolve the company, appoint a liquidator, and approve the initial and final liquidation balance sheets. These balance sheets revealed a lack of assets and the existence of a single creditor, ultimately declaring the company's liquidation and dissolution. It should also be noted that, prior to adopting these resolutions, the company had filed for insolvency proceedings, a request that was denied by a final court ruling based on the absence of multiple creditors.
Once those agreements were formalized, the commercial registrar refused to register them because "the prior satisfaction of the creditors was not proven in the deed presented, as required by article 385 of the Capital Companies Law (...)".
In short, given the circumstances, the DGRN had to decide whether it was possible to register in the Commercial Registry the dissolution of a capital company lacking assets but with a creditor with an unsatisfied debt in its liabilities.
Well, the DGRN's answer to this question is that it is indeed possible, and the reasons that lead the DGRN to take this position are the following:
1) Whereas, although there are a whole series of provisions in the Capital Companies Law (articles 385.1, 390, 391.2, 395.1 b) and in the Commercial Registry Regulations (247.2 3ª) relating to the need to satisfy the creditors' claims in order to proceed with the cancellation of the company's registry entries, these only refer to cases in which there is available assets that allow the payment of the company's obligations, and therefore, in those cases where the non-existence of company assets is proven, they will not apply and, consequently, the cancellation of the company's registry entries cannot be prevented on these grounds.
2) Moreover, in the case under consideration, the request for a declaration of bankruptcy was also rejected, since in that case the refusal to dissolve it would condemn the partners to keep a dissolved company open, with the liquidation operations completed.
Finally, it should be noted that the resolution refers to the question of whether it is necessary, even when there is only one creditor, to request the declaration of insolvency proceedings in order to obtain a resolution of inadmissibility of the application and thus proceed in the manner described in the factual case at hand (agreeing to the dissolution, liquidation and extinction of the company) and the answer to this question is clear in the sense of understanding that said procedure is unnecessary given that “(…) regardless of whether or not the declaration of insolvency is appropriate, the rules of the Capital Companies Law and the Insolvency Law do not make the cancellation of the registry entries of a company that lacks social assets conditional on the prior declaration of insolvency (…)”.
Thus, after the issuance of the aforementioned resolution, it seems clear that those capital companies that are in liquidation, lack assets and have only one creditor in their liabilities, will be able to complete their extinction and cancel their registration entries, avoiding having to remain in an absurd kind of perpetual semi-latency.
Andreu Pujol
Commercial Area – Litigation
Àmbit Assesor
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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