The administrator can respond with his assets in case of insolvency of the commercial company

The economic crisis that began in Spain with covid-19 does not seem to diminish, but rather to increase due to the global context.

Thomas Osborne
Thomas Osborne
29 May 2022 Sunday 23:01
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The administrator can respond with his assets in case of insolvency of the commercial company

The economic crisis that began in Spain with covid-19 does not seem to diminish, but rather to increase due to the global context. Faced with this perspective, administrators of companies in trouble may be concerned about the possibility of their companies going bankrupt and the responsibilities that may arise from it.

Running a business is not easy, and you can end up bankrupt. The administrators have the responsibility to request the dissolution of the company when it is in a state in which it cannot meet its debts. In addition, there is the possibility that, if the company closes with debts, the administrator will have to respond to them with his personal assets.

This measure is protected by article 367 of the Capital Companies Law (LSC) and is officially called "debt liability action". Debt liability is one of the actions most frequently carried out by creditors against administrators. of a debtor company.

According to the regulations established in article 363 of the Capital Companies Law, a company is obliged to dissolve if one of the two scenarios occurs: there have been losses that reduce the net worth to below half of the share capital or else it has gone into cessation of activity for more than a year.

The application of the "responsibility derivation", by means of which the administrator can respond with his assets in case of insolvency of the company, is a consequence of the negligence in the exercise. This is because, when the administrator realizes that the company is incurring in a cause of dissolution, he has the obligation to call the general meeting of the company to adopt a dissolution agreement.

In these cases, the administrator has a period of two months to carry out the dissolution. If, in addition, the company were insolvent, it will have to request bankruptcy proceedings. If none of these measures are carried out or the action deadlines are not met, the company administrator will have to respond jointly and severally to the debts contracted by the company.

However, these measures do not make the administrator responsible for all the debts that the company has, it only applies to those that have been acquired after the date on which the cause of dissolution originated.

The derivation of responsibility has a statute of limitations of 4 years. However, there are certain judicial differences about the date on which the 4-year term begins to count.

Some courts, for example, the Provincial Court of Barcelona in ruling number 251/2017 of June 15, invokes article 241 bis Capital Companies Law to mark the start of the term. Therefore, counting begins from the day on which the liability action could have been brought.

On the other hand, other courts such as the provincial court of León in the judgment of April 16, 2020, take into account article 949 of the Commercial Code, so that the 4-year statute of limitations begins to count from the moment in which that the administrator ceases the exercise of his position.

There is also the possibility that administrators be declared exempt from liability for debts acquired by the company. To do this, there must be proof that he was not involved in the adoption or execution of the harmful agreement, that he was completely unaware of the creation of said agreement or that he disagreed with its creation in order to avoid damage to the company he was managing.

The current crisis has led to an increase in applications for the application of the “debt liability” action on administrators, due to the fact that many companies have declared themselves “insolvent”, prompting creditors to find other ways of trying to recover their assets. money.

Being an insolvent company, the simplest option for creditors is to try to transfer the responsibility to the administrators, since they can respond with their assets in case of debt in the company.

Therefore, all administrators of commercial companies must be very cautious with their management, since they could have to respond with their assets in the event that the company incurs excessive debts and cannot pay them off.