Insolvency 2025

ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra

although in insolvency the company cannot be rehabilitated, either because an agreement with creditors has not been reached or because serious faults have been committed. The company’s directors, unless otherwise stipulated in the articles of association, become the liquidators upon the opening of the liquidation process. There does not appear to be an explicit obligation for any party to initiate the procedure, but it is an essential step once dissolution occurs or the insolvency pro - cedure ends. 5.2 Course of the Liquidation Procedure Upon the initiation of the liquidation procedure, the company continues to retain its legal personality, but it must include the term “in liquidation” (en liquidació) in its corporate name. The company’s directors cease their usual duties and, unless otherwise stipulated by the articles of asso - ciation, become liquidators, assuming responsibility for the liquidation process and becoming the primary actors in the liquidation. Their tasks include preparing the inventory and balance sheet, overseeing the liqui - dation of assets and distributing the remaining assets among shareholders. Liquidators must act in the best interests of the company’s creditors and shareholders. Their facul - ties include representing the company, undertaking necessary legal and financial actions to conclude the liquidation and ensuring creditors are paid before any distribution to shareholders. They must ensure that the rights of creditors are protected, and if needed, can be removed or replaced if they fail to perform their duties adequately. During the liquidation procedure, existing contracts and obligations of the company remain in effect, sub - ject to the liquidation framework. The company is required to fulfil its accounting obligations, providing reports on the operations and outcomes of the liqui - dation. Liquidation does not automatically release the company from its liabilities under pre-existing agree - ments, and contracts may need to be reviewed or ter - minated as part of the liquidation process, ensuring

the proper satisfaction of creditors before distributing the remaining assets to shareholders. Under an insolvency scheme and further liquidation procedure Andorran law is mandatorily applicable; therefore there is no possibility to opt for arbitration instead of court proceedings. 5.3 The End of the Liquidation Procedure(s) The liquidation procedure ends when the final liquida - tion balance is approved by a meeting of the compa - ny’s shareholders and the liquidation of the company’s assets is complete. Once the liquidators have settled the creditors’ claims, distributed the remaining assets, and ensured that all obligations have been met, they must carry out a public deed confirming the liquidation of the com - pany. Following registration of the public deed with the Company Register, the company ceases to exist as a legal entity. Should any assets or liabilities emerge after the company’s dissolution, the former liquidators will be responsible for managing them. In certain instances, the court may appoint new liquidators to carry out these duties. 5.4 The Position of Shareholders and Creditors in Liquidation In the event of liquidation, pre-insolvency attachments continue to be effective, even though the liquidation procedure may require a review of their validity and priority. Retention of title clauses and set-off rights may be maintained, provided that they are consistent with the liquidation process. Provided that secured creditors intend to enforce their security interest, they must act within the frame - work of the liquidation procedure. The liquidators are responsible for overseeing the liquidation of the company’s assets and settling outstanding debts with creditors, ensuring that secured creditors are paid in the proper order of priority. With regards to unsecured creditors, they are entitled to seek recovery from the company’s remaining assets once the secured credi - tors have been fully satisfied.

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