Once the liquidation phase has begun administrative enforcement actions cannot be taken to collect pre-insolvency claims


Under article 55 of the Spanish Insolvency Law, it is not allowed after the insolvency order to take individual enforcement action or initiate tax or administrative enforced collection proceedings against the debtor’s property; although until approval of the liquidation plan, administrative enforcement proceedings in which an attachment order has been issued are allowed to continue, together with enforcement actions for employee claims in which the insolvent company’s assets have been attached, although certain restrictions apply. This means therefore that from when the liquidation phase commences enforcement proceedings can no longer be initiated to collect claims against the insolvent debtor, even if they are pre-insolvency claims.


In a judgment dated March 20, 2019, the Supreme Court examined the case of an insolvent company, which, with the liquidation phase already in motion, received various interlocutory orders initiating enforced collection proceedings targeted at enforcing given tax claims classified as pre-insolvency claims by the tax authorities. Both the tax authorities and later Castilla y León Regional Economic-Administrative Tribunal held that this administrative enforcement was valid, on the basis of article 164.2 of the General Taxation Law and article 84.4 of the Insolvency Law which, they argued, do allow administrative enforcement actions to secure payment of pre-insolvency claims, after the liquidation phase has commenced.


Taking the opposite view, the Supreme Court concluded in its judgment that from a combined interpretation of the mentioned articles of the Insolvency Law (article 55 and article 84.4) and the General Taxation Law (article 164.2), clearly the prohibition of enforcement actions after the liquidation phase has commenced applies in relation to both post-insolvency and pre-insolvency claims, regardless of whether the claims are held by public authorities or other creditors.


This bars the tax authorities from rendering interlocutory orders initiating enforced collection proceedings after the liquidation phase has commenced, to secure payment of their pre-insolvency claims, until the effects of the insolvency order have been lifted. They must apply instead for payment of the pre-insolvency claims to the court hearing the insolvency through the procedures in an ancillary proceeding.


In a decision dated February 26, 2019, the Central Economic-Administrative Tribunal (TEAC) arrived at a similar conclusion in a case where, after the liquidation phase had commenced, the authorities attempted to offset a pre-insolvency claim against a debt owed to the insolvent debtor. TEAC concluded, similarly to the Supreme Court, that this offset is not valid because it amounts to an individual enforcement action against the debtor’s property which cannot be ordered without first bringing an ancillary proceeding with the court hearing the insolvency.


Discover More: Spanish Tax Updates 



Crosshairs Icon

Article tags


Hands on Keyboard


Keep up to date with news, views and updates from Taxand.

Sign-up now »