Company Bankruptcy and Insolvency Services
Expert lawyers in corporate dissolution, liquidation, and restructuring
How to close your limited liability company in Spain?
There are two ways to close your limited liability company in Spain. Either through forced liquidation or voluntary liquidation/dissolution
Forced liquidation is a result of a company being unable to repay certain debts, being unprofitable or following a court order. Court orders for liquidation can come from a variety of sources like illegality of the services provided by the company, irreconcilable financial issues or registration mistakes.
Voluntary liquidation/dissolution is a result of a shareholder agreement to close the services of the company. This can be a result of lack of success or different corporate direction. Dissolution cannot be completed without all outstanding debts being repaid through the liquidation process. These debts cannot be defaulted on through the Spanish Companies Act under dissolution.
Insolvency vs Bankruptcy
There’s a distinct between to these two outcomes. Insolvency is the inability for a company to repay outstanding debts, while bankruptcy is the official declaration of the inability to repay some or all of the company’s outstanding debts. A company Director must file for bankruptcy within two months of learning of insolvency.
How can a lawyer help me?
Our lawyers can help represent clients in court bankruptcy and liquidation proceedings. We also guide clients through the necessary documentation and out of court procedures, including those with shareholders. With restructuring, our lawyers are here to advise on the reconstruction and refinancing of the businesses.
Conversely, we also work with creditors to ensure the protection of their interests in the event a borrower enters bankruptcy.
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What are the requirements for closure?
To close a business, you need to secure shareholder approval and settle all outstanding debts through the liquidation process.
The process of closing a company
There are three legal conditions for dissolving an LLC:
- When the business becomes invalid, the process occurs automatically.
- When there’s a legal or statutory cause for dissolution. This needs to be brought forth by a court order or corporate agreement.
- When the shareholders agree to begin the process, regardless of cause.
The liquidation process starts by ‘removing’ the acting director and appointing a liquidator in accordance with the company’s bylaws. The liquidator can be removed by the director or any other person on the Board.
The liquidation process is finished when all outstanding debts are settled.
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Madeleine Cadwell
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Francesca Coluccio
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Jorge de Ros
LawyerFrequently Asked Questions
The Insolvency Act of 2003 is the main legal provision regarding insolvency. However, COVID-19 has led to some slight adjustments to declaration timetable and information to be submitted.
A company filing for closure still has tax obligations. However, due to COVID-19, losses in 2020 are not included in the dissolution process and there is currently a non-obligatory moratorium on filing for insolvency proceedings until December 2021. Despite those facts, the moratorium does not absolve an individual from personal liability.
The only option for continuing to stay in business after a court ordered liquidation is a restructuring of the company. Our lawyers can help with this process.
Liability is a result of the actions taken by individuals or groups that directly caused a debtor to be unable to repay debts or procedural errors in the insolvency process. A director, partner, parent company, shareholders and recent liquidators are typically liable. Action can be taken by the creditors to seize assets from those liable in the event that the assets of the company cannot settle all outstanding debts.
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