The private liquidation of companies in Colombia is a legitimate mechanism for terminating a legal entity, as regulated by the Commercial Code and Law 1429 of 2010. Once dissolution occurs—whether by operation of law or by decision of the shareholders—the legal framework governing administrators, along with the duties and obligations they must fulfill during and after the liquidation process, becomes particularly relevant.
However, the apparent simplicity of this procedure often leads administrators and shareholders to view it merely as a way to discontinue operations, overlooking the significant legal and operational responsibilities it entails. This misconception can expose them to financial liabilities arising from failures to comply with the fundamental duties of management, administration, and representation throughout the liquidation process.
This is because the cancellation of a company’s commercial registration is completed simply by executing the liquidation deed and registering it with the corresponding Chamber of Commerce. This registration authority operates under the principles of legality and good faith, limiting its role to verifying formal requirements. It does not have the authority to assess the accuracy or veracity of the information contained in the minutes — a function reserved for the judicial authorities or, where applicable, the Superintendency of Companies.
Therefore, while liquidating a company that still has outstanding obligations may appear concerning, it is legally permissible. The real risk for administrators arises when liquidation processes are conducted without observing the legal duties established by law.
Among the most sensitive of these obligations is the duty to notify creditors of the company’s liquidation status once it has been dissolved. This must be done through a notice published in a newspaper with regular circulation in the location of the company’s registered office and posted in a visible place within its offices and business premises (Article 232 of the Commercial Code).
This requirement, far from being a mere formality, serves as a fundamental guarantee for creditors to exercise their rights. Failure to comply not only undermines the validity of the process but has also been grounds for declaring the personal liability of the liquidator in proceedings before the Superintendency of Companies.
Likewise, once a company enters into dissolution, the liquidator must restrict their actions strictly to those necessary for winding up the company. Article 222 of the Commercial Code establishes that, in such cases, the company retains legal capacity solely for the acts required to complete its liquidation. Any action beyond this scope constitutes an excess of authority that directly exposes the liquidator to personal liability in their capacity as administrator and legal representative.
Another critical area of risk concerns the management of liabilities. A company with outstanding debts may be liquidated, provided such obligations are duly included in the final inventory and mechanisms are put in place to address them. Omitting these liabilities constitutes fraud against creditors. The same applies to the order of priority of claims: the distribution of assets must strictly observe the hierarchy set forth in the Civil Code (Articles 2488 et seq.). Failure to do so may result in legal actions against administrators who make improper payments and/or the obligation to return amounts unduly distributed to shareholder beneficiaries.
Contingent liabilities also represent a significant area of risk. The law permits the cancellation of a company’s commercial registration even when ongoing legal proceedings exist; however, in such cases, the liquidator is required to anticipate the possible materialization of these contingencies and to allocate sufficient reserves in the liquidation inventory to cover any potential judgment.
Conversely, if the company’s assets are distributed without considering this possibility and a judgment is later issued, the liquidator’s personal assets may be subject to unlimited liability, even if the legal entity has ceased to exist following the cancellation of its commercial registration.
This situation typically arises when negligent or willful misconduct by the liquidator can be demonstrated—specifically, (i) when the company had the financial capacity to include a contingent liability in the liquidation inventory in cases where its materialization was reasonably foreseeable, or (ii) when the omission can be interpreted as an attempt to evade obligations or obstruct the enforcement of judicial decisions, among other scenarios.
However, failure to comply with these duties does not automatically trigger liability. Nevertheless, it is enough for a creditor to demonstrate that they were not properly notified, that their claim was omitted and discovered only after the company’s liquidation, or that the statutory order of priority was disregarded, for the liquidator to be held personally liable with their own assets in judicial proceedings.
Additionally, Article 25 of Law 1429 of 2010 empowers the Superintendency of Companies to extend this joint and several liability to shareholders when external liabilities are disregarded during the liquidation process—without this constituting an action aimed at disregarding the legal personality or the so-called piercing of the corporate veil.
In conclusion, the role of the liquidator goes far beyond merely managing the final stage of a company’s existence. It entails a heightened duty of diligence and exposes the individual to even greater risks than those faced during normal corporate operations, as the liquidator becomes the ultimate guarantor of legality, transparency, and creditor protection.