Find out when a company is insolvent
If you are an administrator, avoid having to assume responsibilities for not filing the annual accounts in the commercial register
Despite aid such as ERTE and loans with ICO guarantees , bankruptcy proceedings will be a necessary or convenient solution not only for a certain number of affected germany email list companies, but also to organize the interests of a plurality of creditors.
The bankruptcy proceedings are also undergoing a progressive process of change which has led to the drafting of a new consolidated text for the Bankruptcy Law which has already been approved and will come into force next September.
Start of marked textShare! Failure to comply with accounting obligations may result in liability in the event of bankruptcy.End of marked text
For all these reasons, bankruptcy, even its mere probability of future occurrence, represents a test in the relationship between advisors and clients. Advisors must make clients understand the importance of keeping accounting obligations up to date .
The situation of insolvency
Among other cases, a company is insolvent when it cannot regularly meet its due obligations , that is:
You cannot meet your payments to suppliers.
Has outstanding embargoes.
Cannot pay the salaries of its workers
Repeatedly fails to comply with tax or Social Security obligations.
In this situation, the company can request voluntary bankruptcy or express bankruptcy . Bankruptcy regulations indicate that the declaration of bankruptcy must be requested within two months from the date on which the state of insolvency was known or should have been known.
Until the end of the year, neither the debtor has the obligation to request bankruptcy nor will the judges accept the requests for necessary bankruptcy that may be made by the creditors.
However, this deadline is suspended until December 31 by Royal Decree-Law 16/2020, of April 28, on procedural and organizational measures to deal with COVID-19 in the field of the Administration of Justice, so although bankruptcy can be requested before the commercial court, the delay in preparation caused by the inconveniences generated by the state of alarm will not cause liability to the administrative body or harm to the company.
What is an express bankruptcy proceeding?
An express bankruptcy proceeding is one that is declared and concluded in the same act due to insufficient assets of the company. In this type of bankruptcy proceeding, a bankruptcy administrator is not appointed , but the company is extinguished immediately and has the same effects as an ordinary bankruptcy proceeding.
In order to apply for this type of bankruptcy, the conditions provided for in the Bankruptcy Law must be met , so that it is not enough for the company to not have sufficient realizable assets, but possible irregularities and bankruptcy responsibilities of the company are also analyzed, which could lead to an action for reinstatement, challenge or liability, and it must be possible to prove that the company administrator has been diligent and that the insolvency situation has been generated by an objective cause.
The contest and accounting obligations
The commercial code specifies that entrepreneurs must legalize their accounting books and file their annual accounts in the commercial register in which the company is registered.
Failure by administrators to comply with commercial obligations, including failure to file annual accounts with the commercial register , may result in liability being assumed against the administrative body.