The liquidator and the formation and distribution of company assets: duties and liability

The liquidation of a capital company requires the orderly realisation of assets, satisfaction of liabilities and subsequent distribution of the remaining company assets among shareholders. In this process, the liquidator plays a central role and must act diligently, respecting both creditors’ rights and shareholders’ rights to the liquidation quota.

I. Preliminary considerations

The liquidation of a capital company is not a merely formal phase prior to its extinction, but a legally ordered process aimed at transforming the company’s assets into a pool capable of being distributed among the shareholders, once the company’s obligations have been satisfied or duly secured. In this process, the position of the liquidator becomes central, since the liquidator is responsible for leading the company towards extinction and adopting the decisions necessary for the realisation of assets, the satisfaction of liabilities and the subsequent distribution of the remaining assets.

As legal doctrine has noted, liquidation operations comprise a set of substantive actions (completion of pending transactions, collection of claims, payment of debts, realisation of assets and division of the estate) that cannot be reduced to a purely executive activity. The liquidator has a decision-making sphere of his own and, precisely for that reason, is subject to duties of diligence and to a specific liability regime.

Article 375.2 of the Spanish Capital Companies Act (the LSC) provides that the rules applicable to directors shall apply to liquidators where they are not incompatible with the specific rules governing liquidation. Article 397 LSC, in turn, establishes their liability towards shareholders and creditors for any damage caused by wilful misconduct or negligence in the performance of their duties. This framework should also be read consistently with general corporate governance principles applicable to corporate officers.

The fundamental question is therefore to determine what the liquidator must do for the assets to be correctly distributed and when the breach of those duties gives rise to personal liability.

II. The liquidator as guardian of asset integrity during liquidation

Dissolution does not entail the immediate disappearance of the company or the attribution of its assets to the shareholders. Once liquidation has opened, the company retains its legal personality and its assets are allocated to a specific purpose: the orderly termination of its legal relationships.

The liquidator replaces the directors and performs the functions necessary to achieve that purpose. These include completing pending transactions, collecting claims, paying obligations, preserving assets and, where appropriate, selling them.

This role involves a substantial change in the applicable standard of conduct. While a director manages a company aimed at continuity, a liquidator manages assets that are destined to be progressively realised and extinguished. The liquidator’s purpose is not to maximise shareholder return at all costs, but to preserve and realise the company’s assets in an orderly manner, while previously satisfying creditors’ rights.

For that reason, Article 391.2 LSC establishes an essential rule: liquidators may not pay the liquidation quota to shareholders unless creditors’ claims have been satisfied or consigned. This point is also addressed in Seegman’s Guide to Company Liquidation and Winding Up, which sets out the formal and practical steps of liquidation proceedings.

The rule expresses the subordinated position of the shareholder in the liquidation process. During liquidation, the shareholder does not have a right to a specific portion of the company’s assets, but to the quota that results once the company’s assets have been cleared of its obligations.

This circumstance has direct consequences for the liquidator’s liability. The existence of an unpaid liability does not necessarily mean that the liquidator has breached his duties. It is necessary to verify whether the claim was known or reasonably knowable, whether there were sufficient assets to satisfy it and, above all, whether the liquidator improperly distributed among the shareholders assets that should have remained allocated to the payment or securing of company obligations.

III. Formation of company assets and distribution to shareholders

The culmination of the liquidator’s activity lies in the formation and distribution of the company’s remaining assets. The final liquidation balance sheet and the division proposal are the instruments through which the outcome of the liquidation process is externalised.

The liquidator must determine which assets remain, which liabilities must be satisfied, which contingencies remain outstanding and which assets may effectively be considered available for shareholders. The final balance sheet is therefore not a mechanical reproduction of the company’s last balance sheet. It must reflect the economic outcome of the operations carried out during the liquidation.

The issue becomes particularly complex when the remaining assets are not distributed exclusively in cash, but through distributions in kind. In such cases, the liquidator must address questions relating to the identification and valuation of assets and to their distribution among shareholders. The attribution of real estate, shares in other companies, receivables or other assets cannot be carried out arbitrarily. It must respect the proportionality derived from the liquidation quota and, where applicable, the relevant bylaw rules.

Distribution in kind may therefore become one of the moments with the greatest risk of liability. An incorrect valuation or a selective attribution of assets may result in one shareholder receiving assets exceeding what is due, while another shareholder suffers a corresponding loss.

The liquidator’s duty is not to guarantee that all assets are realised at the highest imaginable price, but to act with reasonable diligence in light of the circumstances existing at the time the decision is adopted. For this reason, the subsequent appearance of a different valuation does not automatically give rise to liability. It will be necessary to prove that the valuation or the transaction carried out was unjustifiable in light of the information available.

Recent case law on the distribution of company assets in payment of the liquidation quota further confirms that this transaction has its own nature and cannot simply be equated with an ordinary sale. The distribution is, in reality, the culmination of a liquidation process and must be analysed in connection with the shareholder’s right to the liquidation quota.

IV. Liability of the liquidator: requirements and limits

The liquidator’s liability regime is primarily set out in Articles 375.2 and 397 LSC.

The application of the rules on directors’ liability must take into account the liquidator’s different function. The regime applicable to ordinary business management cannot be mechanically transferred to an activity whose purpose is the orderly extinction of the company. Article 397 LSC requires, in any event, wilful misconduct or negligence and the existence of damage. Accordingly, the liquidator’s liability is not objective.

In particular, three broad scenarios may be distinguished:

a) Breach of duties towards creditors

For example, where the liquidator is aware of the existence of a claim and, despite that, distributes the assets among the shareholders without satisfying or consigning it.

b) Incorrect realisation of assets

This may occur where assets are omitted, sold under manifestly harmful conditions, where the liquidator acts under a conflict of interest, or where decisions are adopted that cannot reasonably be justified from the perspective of the liquidation.

c) Incorrect distribution of the remaining company assets

This includes relevant errors in the final balance sheet, inadequate valuation of assets or distribution of assets that unjustifiably harms one of the shareholders.

In all such cases, it is necessary to establish the causal relationship between the liquidator’s conduct and the damage caused.

For that reason, the company’s asset insufficiency does not amount to liability of the liquidator. If the company’s assets are objectively insufficient to satisfy its debts and the liquidator has acted diligently, the loss falls within the company’s asset risk and the creditors’ risk. It does not necessarily constitute damage attributable to the liquidator.

This distinction is also relevant when comparing the liquidator’s position with the broader framework of directors’ liability for company debts, since the existence of a debt does not automatically determine personal liability without identifying the applicable legal basis and the conduct attributable to the relevant corporate officer.

V. Supreme Court Judgments 1416/2025 and 764/2026: the prohibition of automatic liability

Recent tax case law provides particularly useful elements for delimiting the liquidator’s liability.

Supreme Court Judgment 1416/2025, of 5 November, although referring to the tax liability regime, highlights the need to avoid automatic mechanisms for attributing liability. The Supreme Court requires the Administration to properly identify the responsible person and to base the derivation of liability on legally attributable conduct, rejecting a purely objective conception of directors’ liability.

This doctrine is transferable, mutatis mutandis, to the corporate sphere: the existence of a debt or damage arising after liquidation does not, by itself, allow it to be attributed to the liquidator. It is necessary to identify the specific duty breached, the conduct (active or omissive) of the liquidator, the damage caused and the causal relationship between them.

Even more relevant is Supreme Court Judgment 764/2026, of 18 June 2026, concerning the tax obligations of a dissolved and liquidated company. The Supreme Court held that, once the company has been extinguished, its outstanding tax obligations are transferred to the shareholders in the terms provided by Article 40 of the General Tax Law, so that the subsidiary liability of the director cannot be pursued directly without first respecting the statutory regime of succession and, where applicable, the declaration that the successors have failed to pay.

The relevance of this judgment for the liquidator’s position is clear. The appearance of a tax debt after the extinction of the company does not automatically make the liquidator liable for it.

Two situations must be distinguished.

If the liquidator knew or should have known of the debt and, despite that, distributed among the shareholders the assets that should have been allocated to its payment, there may be liability for breach of duty.

If, by contrast, the debt appeared later and there were no elements that reasonably allowed it to be known or quantified during the liquidation, the mere fact that the company has been extinguished is not sufficient to attribute personal liability to the liquidator.

The above judgment therefore makes it possible to differentiate three concepts that are frequently confused:

1. the company’s debt;
2. the succession of the shareholder who has received the liquidation quota;
3. the liquidator’s personal liability arising from wilful misconduct or negligence.

These are different legal situations and are subject to different requirements.

VI. Conclusion: the liquidator as guarantor of a proper asset transition

The liquidator’s function should be understood as that of a guarantor of the proper transition between the company’s business assets and the residual assets of the shareholders.

The liquidator’s liability is concentrated especially in three moments: the realisation of assets, the satisfaction of liabilities and the distribution of the remaining company assets. In each of them, the liquidator must act with the required diligence, while respecting both creditors’ rights and the equality of shareholders.

The distribution of the remaining assets is, in this respect, much more than the final formal act of liquidation. It is the consequence of all the asset-related decisions previously adopted by the liquidator and the moment in which the shareholders’ economic right materialises. For that reason, distribution in kind requires special caution: the valuation of assets and their attribution to the different shareholders may determine relevant asset differences and, in certain circumstances, constitute the basis for a liability action.

At the same time, once the extinction deed is formalised, the documentary dimension of liquidation should not be overlooked. The obligation to keep books and documents in the liquidation of companies forms part of the legal and registry framework that accompanies the closure of the company.

However, the liquidator is not a universal guarantor of company debts. Article 397 LSC does not establish objective liability. The existence of a subsequent liability, even a tax liability, does not in itself allow its amount to be attributed to the liquidator. Supreme Court Judgments 1416/2025, of 5 November, and 764/2026, of 18 June 2026, reinforce, from the tax perspective, this requirement to individualise liability and the need to respect the legal mechanisms specifically provided for the succession of obligations.

Ultimately, the liquidator’s liability must be built on a logical sequence: breached duty, attributable conduct, damage and causal relationship. Liquidation does not guarantee a specific economic result. It requires diligent and legally ordered conduct.

The liquidator is therefore liable not because the company has been left without assets or because a debt subsequently appears, but because, being able and required to act differently, the liquidator caused damage to creditors or shareholders through wilful misconduct or negligence. This is the key to properly delimiting the liquidator’s position in the liquidation process and, at the same time, avoiding an excessive extension of liability.