Commercial · Art. 2 TRLC

Company Insolvency Test

Q: When is a director required to file for insolvency proceedings?

Art. 5 TRLC establishes that the debtor must file for insolvency within two months of the date on which they knew or should have known of their insolvency. Failure to comply may result in the proceedings being classified as culpable (fraudulent).

Q: What is imminent insolvency?

Under Art. 2.3 TRLC, a debtor is in imminent insolvency if they foresee that they will be unable to meet their obligations regularly and on time. Unlike current insolvency, this allows voluntary filing before default occurs.

Q: What are the warning signs under Art. 584 TRLC?

Art. 584 TRLC establishes objective insolvency indicators: enforcement proceedings unsatisfied for 3 months, asset seizures for debts, bounced cheques, tax or SS arrears for more than 3 months, unpaid wages for more than 3 months, and negative net equity.

Q: What is the pre-insolvency notice under Art. 583 TRLC?

Art. 583 TRLC allows the debtor to notify the court that negotiations with creditors have begun, temporarily staying enforcement actions. It grants 3 months (extendable by 1 month) to reach an agreement before the obligation to file for insolvency arises.

Detect whether your company is in a state of current or imminent insolvency and whether insolvency proceedings should be filed.

Simplified balance sheet

Current assets (€)

€

Cash, receivables, inventories

Non-current assets (€)

€

Property, machinery, intangibles

Current liabilities (€)

€

Debts maturing <1 year, suppliers

Non-current liabilities (€)

€

Long-term loans

Monthly cash flow

Average monthly income (€)

€

Client receipts, rents, etc.

Mandatory monthly payments (€)

€

Suppliers, loans, wages, taxes

Warning signs (Art. 584 TRLC)

Check the situations currently applicable:

Judicial enforcement pending (+3 months unpaid)Bank accounts or assets seized for debtsBounced cheques, promissory notes or billsDefault on loan or credit line instalmentsTax (AEAT) arrears for more than 3 monthsSocial Security arrears for more than 3 monthsUnpaid wages for more than 3 months

Legal notice: This test is indicative. Insolvency proceedings require full legal assessment of Art. 2 TRLC. Directors who fail to file within the legal deadline (2 months) may face liability (Art. 172 bis TRLC). Consult a commercial lawyer.

Art. 2 TRLC: "A debtor is insolvent who cannot regularly meet their enforceable obligations." Deadline to file: 2 months from when the debtor knows or should know of insolvency (Art. 5 TRLC).

Frequently asked questions about insolvency

When is a director required to file for insolvency proceedings?

Art. 5 TRLC establishes that the debtor must file for insolvency within two months of the date on which they knew or should have known of their insolvency. Failure to comply may result in the proceedings being classified as culpable (fraudulent).

What is imminent insolvency?

Under Art. 2.3 TRLC, a debtor is in imminent insolvency if they foresee that they will be unable to meet their obligations regularly and on time. Unlike current insolvency, this allows voluntary filing before default occurs.

What are the warning signs under Art. 584 TRLC?

Art. 584 TRLC establishes objective insolvency indicators: enforcement proceedings unsatisfied for 3 months, asset seizures for debts, bounced cheques, tax or SS arrears for more than 3 months, unpaid wages for more than 3 months, and negative net equity.

What is the pre-insolvency notice under Art. 583 TRLC?

Art. 583 TRLC allows the debtor to notify the court that negotiations with creditors have begun, temporarily staying enforcement actions. It grants 3 months (extendable by 1 month) to reach an agreement before the obligation to file for insolvency arises.