Closed company: what happens to debts?

When a company is canceled from the commercial register, in fact, it no longer exists. In a nutshell, that company dies and just like it happens for deceased people, the company will also have heirs, which in practice will be the old partners. For Italian law, therefore, the heirs of the extinct company, that is the shareholders, will inherit any relationship still pending at the time of the company’s cancellation from the register of companies. This means that the shareholders will inherit any credits and debts contracted by the extinct company. In the event that the company is a creditor, following its closure, the shareholders will automatically be guaranteed the right to collect this credit. On the contrary, if this company is indebted to third parties,

 

What do members risk?

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Of course, it is legitimate to ask what the liability of the shareholders may consist of for the debts accumulated by the company. Well, the answer is not unambiguous and depends on the type of company that has been closed: in fact, the liability regime of the members changes based on the fact that we are dealing with partnerships, such as Snc, Sas or Companies simple, or joint stock companies, such as Srl, Spa and Sapa.

For partnership members to pay a debt incurred will eventually forced to draw on their personal assets, with creditors that may require the seizure of their property, if the company is destitute. With joint-stock companies, shareholders are protected and will never see their personal assets at risk. The creditors or entities can therefore claim only the assets belonging to the closed company, such as current accounts, movable or immovable property, but will not have the right to attach the members’ tangible assets. And if that capital company turns out to be without any good, the creditors have no choice but to file for bankruptcy.In fact, if a capital company becomes indebted, the shareholders will only lose the funds paid at the time of the signing of the company incorporation deed and the capital payments made thereafter.

 

Twofold distinction is valid also at the time of the closure of the company

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In fact, with the extinction of a partnership, the shareholders continue to see their personal assets at risk and, on the other hand, for a capital company, the shareholders will be liable only within the limits of their shares and, in any case, below a maximum ceiling equal to what was paid to them after the last liquidation balance sheet. And if after such financial statements the shareholders had not obtained any consideration, in practice, they will not risk anything.

For partnerships, therefore, the debts are transferred to the shareholders and this is what was established by sentence no. 6017 of 2013 promulgated by the United Sections of the Court of Cassation.

 

Who compensates the tax liabilities of a closed company?

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Only joint stock companies, and only when they have entered into debts with the tax authorities, despite having been canceled from the register of companies, will they continue to be considered “alive” by the Revenue Collection Agency, the old Lenders Grade Finance, which for another five years will have the faculty to bring the company to court or file for bankruptcy. However, for the bankruptcy request, the creditor, as well as the Italian taxman, has only one year to spare since the company was eliminated from the commercial register. And if the bankruptcy filing does not occur within the year, the canceled company can no longer be declared bankrupt, despite the creditor’s request being received within the time limits established by law. The same applies to the tax authorities:

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