In May 2020, right in the middle of the worst of the first wave of Covid-19, the Government passed a Royal Decree-Law (Real Decreto Legislativo 1/2020, de 5 de mayo) that consolidated, reorganised and brought up to date the Ley Concursal (Insolvency Law) of 2003. The date that the law took effect was 1 September 2020.
There has been some criticism of the method of bring this new law into effect because the process avoided the scrutiny of the two parliamentary bodies, the Congreso and Senato. Nevertheless, Insolvency Law in Spain has suffered numerous modifications and patches since 2003, with the result that it had become overcomplicated and inefficient.
The second Covid-19 wave and its lockdown regime has put the final nail in the coffin for thousands of already vulnerable businesses and now, in November 2020, the fallout from the Covid-19 lockdowns is really being felt with insolvency processes increasing up to 80% from the usual levels.
One of the biggest criticisms of Spanish insolvency law has been the excessive time and cost of the procedures. The high costs of a liquidation at a time when a company has very limited funds has always been a terrible Catch 22 and forced the directors of most small companies to simply ‘shut up shop’ and walk away. The failure to put a company into formal liquidation is regarded as an act of negligence making it possible for creditors to pursue directors personally and claim against their personal assets.
First introduced in a 2011 as an amendment to the 2003 law, the new law contains in its articles 470-472 provisions that enables directors to apply for the liquidation of companies with significantly less cost and formality.
The Concuso Exprés is allowed when a company has no assets or only has assets of insignificant value available to pay its creditors.
The Concurso Exprés has the following very significant advantages:
- No appointment of an Administrador Concursal (Liquidator) is required.
- No formal liquidation process is required.
- The liquidation of the company proceeds immediately without the years of delay that where a characteristic of the old law.
- The company ceases to exist and is eliminated from the mercantile registry relatively quickly.
Applying for the Concurso Exprés exonerates the directors and prevents actions against them by the creditors of the company, always assuming that the company has been properly managed and thy have not fraudulently made use of company assets .
Costs for the Concurso Exprés a modest and affordable and we provide practical advice and work with competent specialist lawyers.