The new Insolvency Act provides companies with fewer than ten employees and a turnover of less than two million euros that are in difficulties with the possibility of opening a special continuation procedure. This procedure may allow them to exonerate their debts with the Social Security and Tax Authorities for a maximum value of 10,000 euros in each case.
This is an important advantage over the previous legislation, which set the limit at €1,000 of debt owed to each public entity. However, this possibility is subject to some conditions and it is important to act quickly.
Micro-enterprises in insolvency proceedings may lose their exemption if they do not inform the Adminstration
72 hours from the request to open a special continuation procedure. This is the deadline for companies to inform the Social Security and Tax Authorities, according to a recent publication on the Social Security website. Otherwise, they could lose the right to exonerate their public debts.
This is a very relevant issue in a procedure of this type. Failure to notify the opening of insolvency proceedings to the administration, or failure to do so in time or correctly following the established channels, may mean that the company loses the right to the reductions and waivers resulting from the special continuation procedure.
Exemption of up to 20,000 euros on public debts of companies
And these exonerations could amount to a total of 20,000 euros (10,000 euros for the Treasury and another 10,000 euros for the Social Security). Specifically, the new Insolvency Law foresees that the exoneration of public debts will be 50% of the total amount owed to the Administration and without being able to exceed 10,000 euros per entity. In other words, the company can only reach the maximum of 20,000 euros if it has outstanding obligations of more than 20,000 euros with the Tax Authorities and more than 20,000 euros with the Social Security.
How to inform Social Security of the opening of special bankruptcy proceedings
The Social Security has set up an online service through which microenterprises that are in special insolvency proceedings and have debts with the General Treasury can notify this situation.
The basic condition is that the initiation of the special continuation procedure has been requested not earlier than 72 hours before.
How to obtain discharge of public debt in special bankrupcy proceedings
In order to be exonerated from its public debts, the microenterprise must prove its indebtedness through a special bankruptcy procedure. In order to facilitate this procedure, a procedure consisting of a digital test was launched on 9 January.
This new insolvency platform allows microenterprises to communicate directly with the commercial courts. For example, it makes it easier for them to file the various standard forms. In this way, the information arrives and can be stored by the Commercial Registry or by the competent court, speeding up the procedures.
There are two requirements for companies wishing to initiate the fast-track procedure:
- Have an average of less than 10 workers over the previous year.
- Have recorded a turnover of less than 700,000 euros and liabilities of less than 350,000 euros during the previous year.
If your company is in difficulties and you are facing the filing of a special insolvency proceeding, Confianz can advise you throughout the whole process.