Special Insolvency Proceedings for Micro-Enterprises

Special procedure for micro-enterprises:

The special micro-enterprise procedure is a "unique insolvency mechanism, specially tailored" and "characterised by maximum procedural simplicity" for companies:

• at risk of insolvency,
• in a state of imminent insolvency
• or in a state of current insolvency

Written by Josep Conesa

Employment and insolvency lawyer

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Deadline for filing for insolvency proceedings as a micro-enterprise:

The application must be submitted within two months of the date on which the state of current insolvency became known or should have become known.

This is done via the following link: https://www.administraciondejusticia.gob.es 

MICRO-ENTERPRISE GUIDE

MICRO-ENTERPRISE PLATFORM GUIDE

WHICH COMPANIES ARE SUBJECT TO THE INSOLVENCY PROCEDURE FOR MICRO-ENTERPRISES:

Companies (natural or legal persons, i.e. self-employed individuals or incorporated entities) that meet the following criteria (Article 685 of the Spanish Insolvency Act):

• an average of fewer than 10 employees over the past year (calculated on the basis of hours worked),
• an annual turnover of less than €700,000 or total liabilities of less than €350,000

KEY FEATURES OF THE MICRO-ENTERPRISE PROCEDURE:

Liquidation:

• • It may be processed as either a:
    • going-concern procedure
    • liquidation (mandatory where 85% of debt is public credit):
      
      • with transfer of the company as a going concern
      • without transfer of the company as a going concern
        • if a party other than the debtor with standing to do so requests insolvency proceedings on grounds of imminent insolvency, this will always proceed without liquidation.

Court procedure:

• Oral rulings and judgments may be issued during proceedings (Article 687 of the Insolvency Act)
• The debtor will be required to instruct both a lawyer and a court representative (procurador)

When is a micro-enterprise insolvency deemed culpable:

• Where false documents were submitted or accompanied the filing.
• Where the debtor committed a material inaccuracy

  • in the standardised forms submitted

  • in the documents accompanying those forms and submitted during the proceedings

• A material inaccuracy is understood to exist where the total amount for a given financial year — whether liabilities, assets, income or expenses — is actually more than 20% higher or lower than the figure declared in the form, provided the difference amounts to at least €10,000.

Other new features of the micro-enterprise insolvency procedure:

• • Micro-enterprises will not have access to restructuring plans.
  • Particular importance attaches to continuation plans, which are the equivalent of the creditor arrangement (convenio) in standard insolvency proceedings.
    • The principle of "silence means consent" applies, meaning that "a creditor who does not cast any vote will be deemed to have voted in favour of the plan" — the aim being to encourage creditor participation in these processes.
  • Provision is made for the use of a liquidation platform, the development of which is entrusted to the Ministry of Justice and which should be operational within six months. In any event, the application of the special procedure is linked to the launch of this platform.
  • Where the debtor-micro-enterprise is a natural person, entitlement to free legal aid is recognised.
• FAQs – Electronic Service for Micro-Enterprises

Find out everything about the new Spanish Insolvency Act 2022: