Express insolvency (concurso exprés) and no-asset insolvency are simplified insolvency procedures established by Article 37 bis of the Texto Refundido de la Ley Concursal (TRLC, Legislative Royal Decree 1/2020) for companies whose assets are insufficient to meet the costs of ordinary insolvency proceedings. In these cases, the commercial court simultaneously declares the insolvency and its conclusion due to insufficiency of the estate, issuing a single order that closes the company and enables cancellation of its registration at the Mercantile Registry. The procedure allows a company to be legally dissolved and deregistered without the director needing to fund a full insolvency administration — resolving a situation that otherwise creates indefinite director liability under Articles 363 and 367 of the Ley de Sociedades de Capital (LSC).
This service is part of our legal advisory practice.
Do you have a company with debts you cannot close?
This is more common than it might seem: a company that ceased operations one, two or five years ago, with outstanding debts to suppliers, the tax authority or social security, that cannot be formally dissolved because there are no assets to pay the creditors.
The ordinary route — voluntary dissolution and liquidation — requires the liquidator to pay all debts or for the shareholders to be personally liable for the shortfall. If there are insufficient assets and the shareholders cannot or will not make up the difference, the company is trapped in a legal limbo: it cannot close, it cannot operate, and the director continues to appear in the Companies Register with the liability that entails.
The Insolvency Act has a specific answer for this situation: no-asset insolvency and express insolvency, regulated under Art. 37bis of the TRLC. These are procedures designed to close companies with no assets legally, quickly and definitively — including registry cancellation.
How express insolvency and no-asset insolvency work
Art. 37bis TRLC provides that when a company’s active estate is insufficient to pay the claims against the estate (the costs of the insolvency proceedings themselves: insolvency administrator fees, court costs, last 30 days’ wages), the court can declare the insolvency and close it simultaneously.
The process works as follows:
Application and declaration. The director files a voluntary insolvency application with the commercial court, accompanied by the financial position statement, the asset inventory and the list of creditors. In the application itself, or in the days that follow, the court establishes that the active estate is insufficient.
Simultaneous closure order. If the active estate is insufficient for claims against the estate, the court issues in a single order the insolvency declaration and its conclusion due to estate insufficiency. There is no liquidation phase because there is nothing to liquidate. There is no insolvency administrator in most cases.
Registry cancellation. The closure order opens the culpability section (brief) and, after its close, the cancellation of the company’s Companies Register entry. The company ceases to exist as a legal entity.
The complete process can be completed in weeks or a few months — compared to the 12-24 months of ordinary insolvency proceedings — and at a significantly lower cost.
The BEPI route: personal debt discharge following insolvency
For directors or shareholders who are individuals who have given personal guarantees (bank sureties, bonds) for company debts, company closure does not automatically resolve their personal situation. Banks and other creditors can continue to pursue the guarantor even after the company has closed.
The fresh start mechanism (BEPI — Unsatisfied Debt Discharge Benefit) of the TRLC allows individuals to be released from these personal debts through a specific procedure. The individual applies for their own insolvency proceedings (or accesses the BEPI through the micro-enterprise procedure), and if they meet the good-faith insolvency requirements, the court can discharge the debts that could not be satisfied.
The Supreme Court judgments of February 2026 (STS 260/2026 and 254/2026) have extended the scope of the BEPI: public debt owed to AEAT and TGSS — which was previously almost entirely excluded — can now be partially discharged (surcharges, late payment interest and penalties, which are subordinated claims, are discharged in full; the principal can also be discharged within the established limits).
We coordinate the express insolvency proceedings for the company with the fresh start procedure for the director as an individual, to optimise the overall outcome and ensure that both closures — the company’s and the personal one — are achieved in the shortest possible time.
Closing a company with debts: options compared
Not all no-asset insolvency situations are the same. The main options are:
| Situation | Instrument | Who can use it |
|---|
| No assets, with debts, inactive company | Express insolvency (Art. 37bis TRLC) | Any company |
| Fewer than 10 employees, liability <€1M | Special micro-enterprise procedure | Eligible micro-enterprises |
| Individual with debts | Fresh start (BEPI) | Individuals |
In many cases the optimal solution combines the company’s express insolvency with the director’s personal BEPI. The initial consultation is free of charge and we will determine the most appropriate route for your specific situation.
Regulatory Framework: Art. 37 bis TRLC and Recent Developments
Express insolvency and no-asset insolvency are regulated under Articles 37 bis to 37 quinquies of the Texto Refundido de la Ley Concursal (TRLC, Legislative Royal Decree 1/2020), as amended by Law 16/2022 on restructuring and insolvency reform. Prior to the TRLC, the equivalent mechanism operated under Article 176 bis of the old Insolvency Act (Law 22/2003) — the TRLC consolidated and updated the regime.
Art. 37 bis TRLC provides that where the active estate — all company assets at the time of the insolvency filing — is insufficient to pay the claims against the estate (créditos contra la masa: insolvency administrator fees, last 30 days’ wages, court costs), the insolvency can be declared and simultaneously closed. The court issues a single order declaring: (i) the insolvency, (ii) the simultaneous conclusion of the insolvency due to estate insufficiency, and (iii) the opening of the culpability section. Registry cancellation follows once the culpability section is resolved — typically within weeks for fortuitous insolvency cases.
Law 16/2022 further introduced the special procedure for micro-enterprises (empresas de reducido tamaño, Arts. 685 to 720 TRLC) for companies with fewer than 10 employees and total liabilities below EUR 1 million, providing an even more streamlined and economical route than Art. 37 bis for eligible companies.
The Culpability Section: What Directors Need to Know
The culpability section (sección de calificación) is the part of insolvency proceedings where the court determines whether the insolvency is fortuitous (casual) or culpable (culpable). This determination can have severe personal consequences for directors.
A culpable insolvency classification under Arts. 442 et seq. TRLC can result in:
- Prohibition from managing companies or representing legal persons for two to fifteen years.
- An order to cover the insolvency deficit from the director’s personal assets.
- Liability for the entirety of unpaid creditor claims in cases of fraudulent conduct.
The key distinction is between delay in filing the insolvency application and the underlying causes of the insolvency. If a director can demonstrate that: (i) the insolvency application was filed within two months of becoming aware of the insolvency state, (ii) the causes of the insolvency were external to the director’s control, and (iii) no fraudulent or negligent conduct occurred, the culpability section will typically conclude with a fortuitous classification and no personal liability.
We advise directors from the initial consultation on how to document their conduct to support a fortuitous classification. The documentation standard required is higher than most directors expect: the preparation of the company’s accounts, the timing of the filing, and the records of management decisions in the period before insolvency all become exhibits in the culpability section.
Sectors Most Frequently Using Express Insolvency
Construction and real estate: project-based companies that completed their last development and ceased operations with residual trade debts, combined with historical tax debts.
Hospitality: restaurant and hotel operating companies that became insolvent during the 2020-2021 COVID-19 period and have been unable to formally close, with lease liabilities, supplier debts, and social security contribution arrears.
Retail: small retail operations that ceased trading after the e-commerce shift, with lease liabilities and supplier debts that cannot be met from remaining assets.
Professional services: service companies whose main asset was a key client contract that ended, leaving employment liabilities and professional service debts as the only significant obligations.
In all these cases the typical pattern is the same: the company stopped trading 12-48 months before the legal adviser is consulted, no accounts have been filed for the last two or three years, and the director has been personally guaranteeing the company’s banking debts through surety bonds.
Company Size Segmentation
Single-director microenterprises (fewer than 5 employees, turnover under EUR 500,000) are the most frequent users of express insolvency. In many cases the court process is highly streamlined and the total professional fees are significantly lower than for ordinary insolvency proceedings.
SMEs with 5-50 employees may qualify for the micro-enterprise procedure under Law 16/2022 if within the size thresholds. This procedure uses simplified forms, has reduced court fees, and can be completed faster than the standard Art. 37 bis route. We assess eligibility at the initial diagnostic stage.
Medium companies (50-250 employees) with no assets require standard Art. 37 bis proceedings but with more complex culpability section management: the number of creditors, the amount of employment liabilities, and the higher profile of potential culpable conduct all require more intensive director advisory.
Worked Example: Family Business Closure
A family distribution company (3 employees, turnover EUR 2.1 million in its last active year) had been inactive for two and a half years. Outstanding debts: EUR 87,000 to suppliers, EUR 43,000 to AEAT, EUR 31,000 to TGSS, EUR 22,000 in bank debt secured by a personal guarantee from the sole director.
Process managed by BMC:
- Week 1: financial diagnostic confirming estate insufficiency (assets EUR 8,000 vs. minimum claims against the estate of EUR 12,000).
- Week 2: preparation of the TRLC application — financial position statement, asset inventory, creditor list with EUR 183,000 total liability.
- Week 3: application filed with the Commercial Court.
- Week 7: court issued the simultaneous declaration and conclusion order under Art. 37 bis TRLC.
- Week 14: culpability section closed with fortuitous classification (documented operational cessation predating filing by 30 months, no fraudulent transfers).
- Week 16: Companies Register cancellation obtained.
- Month 5: BEPI proceedings initiated for the EUR 22,000 personal guarantee debt.
Common Mistakes We Fix
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Waiting too long to seek advice. Every month of delay after cessation of activity adds surcharges, late interest, and potential liability for late Companies Register filing.
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Attempting informal dissolution without clearing the debts. Companies with uncovered liabilities cannot be dissolved under LSC voluntary procedures. Attempting to close the company by simply ceasing to file taxes creates accumulated violations that increase culpability risk.
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Not coordinating the company closure with the director’s personal BEPI. Directors who close the company through express insolvency but do not simultaneously address personal guarantee debts remain personally exposed to creditor enforcement.
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Failing to document the causes of insolvency. A director who cannot demonstrate — with emails, board decisions, and financial records — what caused the insolvency is in a materially weaker position in the culpability section.
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Underestimating the impact of the 2026 BEPI expansion. The Supreme Court judgments of February 2026 extended BEPI relief to partial discharge of public debt principal. Directors who previously concluded that their personal debts were not dischargeable should have their cases reassessed.
Geographic Coverage
Express insolvency applications are filed with the Commercial Court at the company’s registered address. Our insolvency team manages proceedings before the Commercial Courts in Madrid, Barcelona, Málaga, Marbella, Valencia, Murcia, and Las Palmas de Gran Canaria. For companies with multi-province operations, we advise on registered address considerations that may affect court selection and timeline.
Directors’ Personal Liability Before and After Company Closure
The moment directors most frequently underestimate in express insolvency is the period between the company’s cessation of activity and the formal insolvency filing. During this period, LSC Articles 363 and 367 impose specific obligations on directors: once a cause for dissolution exists (losses reducing net equity below half the share capital), directors must convene the shareholders within two months and, if the shareholders do not dissolve or recapitalise, file the insolvency application within two months of the expiry of the dissolution deadline.
Directors who fail to comply with this timeline may be jointly and severally liable for company obligations arising after the dissolution cause without timely action. This is separate from the culpable insolvency risk: even in a fortuitous insolvency, the director who delayed action may face Art. 367 LSC liability for debts incurred by the company during the period of inaction. The two liability regimes are independent and can be combined.
We assess the Art. 367 LSC exposure at the initial consultation and advise on the most efficient way to address it. In some cases, the Art. 367 LSC claim is time-barred; in others, it is the most pressing personal liability for the director and must be addressed as part of the overall strategy alongside the BEPI.
Interaction with Employment Obligations
A company in express insolvency that has employed workers in the period before insolvency must manage FOGASA (Fondo de Garantía Salarial) procedures for outstanding wages and severance payments that the company cannot pay. FOGASA guarantees certain wage and severance claims of workers of insolvent companies, up to the statutory limits (salary: double the minimum wage for 120 days; severance: double the minimum wage for one year of service per year of service, maximum 12 years).
The express insolvency filing triggers the FOGASA guarantee mechanism, allowing workers to obtain payment of guaranteed amounts from the state guarantee fund rather than waiting as unsatisfied creditors. We manage the FOGASA filing as part of the express insolvency procedure, ensuring that workers’ claims are processed correctly and that any disputes about the basis for claims are managed before the commercial court.
Interaction with Tax Agency and TGSS After Company Cancellation
Companies cancelled from the Companies Register are formally dissolved as legal entities, but this does not automatically result in all tax and social security obligations being discharged. The AEAT and TGSS may continue enforcement actions against assets that were not disclosed in the insolvency proceedings or may attempt liability derivation to directors for obligations that arose before the cancellation.
For companies where there is a risk of post-cancellation enforcement by the tax authority or social security (particularly where there are outstanding payroll tax withholdings or collected VAT that was not remitted), we advise on the coordination between the express insolvency filing, the culpability section documentation, and the BEPI proceedings for the director, to ensure that the entire exposure is addressed comprehensively rather than in isolated steps that may leave gaps. The initial consultation is free of charge and covers all aspects of the company closure and personal liability situation in a single session.