The law specifies that, if there is insolvency and also losses that reduce the net worth to half of the share capital, the directors will not have to call a meeting to agree to the dissolution if, within two months from the cause of dissolution (or, where applicable, from the acceptance of the position), they activate the insolvency mechanisms.
We would like to inform you that it is essential to differentiate between the declaration of bankruptcy and the cause of dissolution of a company.
The declaration of insolvency must be made by the directors within two months of becoming aware of the company's insolvency. Legally, insolvency is understood as the inability to regularly meet the obligations owed to creditors. Therefore, if a director aware of the insolvency fails to file for insolvency within two months of becoming aware of it, this may lead to the insolvency being deemed culpable.
In addition to this declaration of culpable bankruptcy, the administrator faces other consequences such as possible judicial disqualification or even a potential order to cover the bankruptcy deficit. This latter provision means that the administrator assumes financial responsibility for covering the difference between the value of the company's assets and the debts recognized in the list of creditors; in other words, they cover the debts to the extent that the company's assets cannot be used to pay them.
On the other hand, there is the company's entry into dissolution proceedings. The causes of dissolution constitute a distinct legal concept separate from insolvency and bankruptcy proceedings. Firstly, it is not governed by the Bankruptcy Law, but by the Capital Companies Law. This law establishes several legal grounds under which a company's directors must convene the company's governing bodies to initiate dissolution proceedings. The most similar to insolvency, and one that could occur simultaneously with it (although this is not always the case), is equity imbalance. Equity imbalance occurs when the company's net worth (the result of subtracting liabilities from assets) is less than half the value of its share capital. This does not always imply insolvency, as a company can be in a situation of equity imbalance and be up-to-date with its payments to creditors, and vice versa; that is, it can lack the liquidity to meet its obligations and yet have a positive net worth.
When a company director detects a financial imbalance, they must convene a general meeting within two months to adopt a resolution for dissolution. Failure to comply with this legal obligation has different and more serious consequences than those outlined for the case of not declaring insolvency. This is because the director is declared jointly and severally liable for the company's debts incurred after the financial imbalance arises. Consequently, creditors may claim the amounts owed from either the creditor or the company.
As you can see, these are different situations that don't necessarily coincide. However, it's also possible for them to occur simultaneously, since a company with such low net worth could very well be insolvent and unable to meet its obligations. In this case, it will be necessary to determine if there are debts, because if there are, bankruptcy proceedings must be filed before dissolution, as dissolution is not possible. However, if dissolution is possible because there are more assets than liabilities, the most appropriate course of action would be to proceed directly with dissolution.
In short, if insolvency and financial imbalance occur, the administrators must first manage the insolvency by requesting the declaration of bankruptcy, even if the responsibility for not dissolving seems more serious.
You can contact this professional office for any questions or clarifications you may have.
Warm regards,
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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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