LANDMARK COMMERCIAL COURT DECISION
Dear clients and readers,
I am proud to announce that we have recently won another important court case regarding the non-payment of a debt by a company.
The novelty about this commercial dispute case is that we have managed to obtain on behalf of our client, a satisfactory decision which sentences BOTH the limited company as well as the Shareholders of the company to pay the debt to our client.
In other words, the Director of the company will be jointly liable with his own personal assets for the full payment of the debt plus legal interests and costs.
Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. However, the reason why this court decision is a success, is because it has lifted the corporate veil, and as a result the rights or duties of a corporation are treated as the rights or liabilities of its shareholders.
According to the decision, the right criteria in order to ascertain whether the corporate veil must be lifted or not, will depend on assessing several factors aimed to ascertain whether the company has real activity or not.
For instance, in essence, it will be crucial to check if the annual submission of the company accounts has been properly done, if the company has employees, or if at the event of liquidation, the right legal procedure (“bankruptcy process”) has been followed or not.
Among others the court’s decision refers to the landmark Supreme Court rulings of 10th October 2000(RJ2000,9909), 14th May 2007( RJ2007,3354) and 6th November 2008(RJ 2008,5901).
Obviously, this legal decision has a tremendous practical impact in those future cases where for example the company might have been illegally liquidated and left with no assets at all by its Administrators.
This is unfortunately a frequent problem in Spain, where many unscrupulous Builders have for example set up limited companies in the past in order to carry out illegal activities and later on, their shareholders simply disappeared with all the money, leaving the company dormant and with no money at all to respond for the debts originated by the company.
Until now, many creditors were hopeless in trying to get their money back, but fortunately from now own, it will be easier for us to claim liability directly from the shareholders of the company.
We hope this information is useful and should you have any additional question about this or other legal matter, please visit any of our two websites: www.ricorabogados.com or www.englishsolicitorinspain.com
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Thank you very much for your attention and permanent support and we look forward to helping you!
Mr Oscar Ricor“NON-PRACTISING ENGLISH SOLICITOR IN ENGLAND AND WALES”, under the “Solicitors Regulation Authority” (SRA) SRA number 519196 and practicing Spanish Solicitor
(P.S The details of the Court as well as the client’s name in the enclosed court’s decision have been deleted due to confidential reasons. However, the full original court’s decision is available in the Merchantile Court of Alicante nº2)
LANDMARK COMMERCIAL COURT DECISION