Insolvency, closing and selling

It is for people considering, planning or carrying out a move to Spain, including anyone who runs or owns a company there. You will know the legal triggers, your options and the steps for winding down or selling.

Start with "When a struggling company must dissolve or file for insolvency". It shows you the triggers to spot before personal liability arises. From there, pick the page that fits your situation.

Key rules

• Filing for insolvency: You must file for insolvency (concurso) within two months of knowing, or when you should have known, that the company cannot pay its debts as they fall due.
• Calling the meeting: Once a dissolution cause such as equity below half of share capital arises, administrators must call the general meeting within two months.
• Vote: Dissolving an SL needs a majority of votes cast that also represents at least one third of all votes, unless the articles set more.
• Notice: Give each shareholder individual notice at least 15 days ahead, unless everyone attends and agrees to a universal meeting.
• Microenterprise limit: The fast procedure is only for companies with fewer than 10 employees and turnover below 700,000 euros or liabilities below 350,000 euros.
• Dormant is not exempt: A company with no activity still files its accounts and corporate tax return every year.

Insolvency, closing and selling: the whole process, step by step

• Spot a dissolution cause, such as losses leaving equity below half of share capital (read: When a struggling company must dissolve or file for insolvency): as soon as the accounts or facts show it

• Administrators call the general meeting to dissolve the company or fix the problem (read: When a struggling company must dissolve or file for insolvency): within two months of knowing of the cause

• If the meeting is not held or decides nothing, ask the commercial court for dissolution; administrators who miss this become personally liable for later debts: within two months of the date the meeting was due or held

• If the company cannot pay its debts as they fall due, file for insolvency (concurso) (read: How insolvency (concurso de acreedores) works for a small company): within two months of knowing, or when you should have known

• Optionally notify creditors that you are negotiating a restructuring; this pauses the filing duty for three months plus a further period, and if no deal is reached you then have one month to file: before the two-month filing period ends

• If you choose voluntary closure, call the shareholders' meeting to vote on dissolution (read: Closing a company voluntarily: dissolution and liquidation): at least 15 days' notice for an SL

• If there are employees, decide the route: collective dismissal, individual economic dismissal or insolvency, and complete dismissals before or at dissolution (read: Closing a company that still has employees, step by step): before dissolving; consultation in a collective dismissal lasts up to 30 days, or 15 days in firms under 50 workers

• Deregister workers with Social Security, close the contribution account, then file the tax census deregistration once the company is cancelled at the Registro Mercantil: after dismissals and before final cancellation of the tax census entry

• File the final corporate tax return, VAT and informative returns: corporate tax return due within 25 days after six months from the end of the final period

• If the company stays inactive instead of closing, keep filing: accounts prepared within three months of year-end, approved within six months, deposited within one month of approval (read: Dormant or dissolved: what an inactive company still owes): every year until it is cancelled

• If you sell the company or its shares, a non-resident seller files form 210 with the tax agency (read: Selling your company or its assets in Spain): within 3 months of the sale

• If you owe personal debts after the business fails, apply for debt discharge through the payment plan or liquidation route (read: Relief from personal debts after a business fails (segunda oportunidad)): after insolvency, with a payment plan of 3 years or 5 years in other cases

Documents you may need

Income and work

• Last corporate income tax return — Closing a company voluntarily: dissolution and liquidation

Payments and receipts

• Public deed of transfer — Selling your company or its assets in Spain

Translations and legal papers

• Deed of dissolution from a notary — Closing a company voluntarily: dissolution and liquidation

Other documents

• Certified minutes of the general meeting — Closing a company voluntarily: dissolution and liquidation
• Final liquidation balance — Closing a company voluntarily: dissolution and liquidation
• Bank account statement for the cancellation filing — Closing a company voluntarily: dissolution and liquidation
• Census declaration — Closing a company voluntarily: dissolution and liquidation
• Written communication opening the collective dismissal — Closing a company that still has employees, step by step
• Memoria explaining the causes of the dismissals — Closing a company that still has employees, step by step
• Supporting documents for the memoria — Closing a company that still has employees, step by step
• Finiquito for each worker — Closing a company that still has employees, step by step

Each article lists the other documents it asks for, where you need them.

Insolvency, closing and selling: questions that cross several articles

Do I have to file for insolvency if I have already called the dissolution meeting?

Not necessarily, but if the company cannot pay its debts as they fall due, the insolvency filing duty runs separately from the dissolution meeting. The deadline is two months from knowing, so do not wait for the meeting result. Read both "When a struggling company must dissolve or file for insolvency" and "How insolvency (concurso de acreedores) works for a small company".

Am I personally liable if I miss the two-month deadlines?

Yes, administrators who miss the meeting or court deadline become jointly liable for company debts arising after the cause appeared. Those debts are presumed to arise after it unless you prove otherwise, and liability ends when the cause is cured.

What is the difference between current and imminent insolvency?

Current insolvency means you cannot regularly pay debts as they fall due, while imminent insolvency means you foresee that you will not manage this in the next three months. You can file in either case, but creditors can only apply for current insolvency.

Can I just stop trading and leave the company dormant instead of closing it?

Yes, you can leave it dormant, but it still has yearly duties such as accounts, a corporate tax return and book legalisation, even with no activity. Dissolution causes and insolvency duties can still apply while it sits idle. Read "Dormant or dissolved: what an inactive company still owes" and "Closing a company voluntarily: dissolution and liquidation".