Insolvency and Restructuring for Companies
Wolfenson Lawyers provides its clients with rigorous insolvency legal advice for companies.
We advise our clients in the procedures of Law 20,720 when it is impossible to fulfill their obligations. In situations where the debts exceed the economic options of the companies, there are judicial and extrajudicial procedures that allow our clients to reorganize their debts as well as to liquidate their corporate assets, allowing them to start again in their business projects.
It is recurrent to consult what are the procedures available for a company to face creditors whose credits and debts it cannot satisfy. These procedures are established by Law 20,720, classified into procedures for the debtor and others for the debtor company.
Here is a legal guide to provide you with guidance on the main insolvency procedures of the debtor company:
1) Bankruptcy Reorganization Procedure of the Debtor Company:
It consists of that judicial procedure , which has the purpose of restructuring the Debtor Company's liabilities and assets , when it is considered viable and only debtor companies can submit to it.
Debtor Companies are:
to) Legal persons under private law , with or without profit,
b) First Category taxpayers , and
c) Individuals contributing to Article 42 N ° 2 of the Income Tax Law (people who have issued a fee slip in the last two years.
Which are the requirements?
The Debtor Company must meet the following requirements:
a) Submit a request for the initiation of Reorganization Insolvency Proceedings , the model of which will be available in court, at the offices of the Superintendency and on its website.
b) Accompany before the competent court and the Superintendence of Insolvency and Re-entrepreneurship , as appropriate, the background required by articles 55 and 56 of Law No. 20,720 , which are intended to determine the liabilities of the Debtor Company .
The debtor must accompany the court, at a first opportunity, the request to start the bankruptcy reorganization procedure. Then, once the nomination certificate has been issued by the Superintendency , you must accompany the court with the following:
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List of your assets.
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List of third party assets.
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List of assets held by the debtor in a different quality from that of the owner.
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Debt certificate of an independent auditor , indicating the status of debts, name, address and email of their creditors or legal representatives, nature of the titles (debt), amount of credits indicating the percentage that each represents of the total of liabilities. Expression of the three largest creditors, excluding related persons.
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Balance corresponding to his last exercise and provisional balance , if the debtor will keep complete accounting.
The debtor must accompany the Superintendency:
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Copy of the request to initiate the reorganization bankruptcy procedure before the competent court.
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Debt certificate of an independent auditor , indicating the status of debts, name, address and email of their creditors or legal representatives, nature of the titles (debt), amount of credits indicating the percentage that each represents of the total of liabilities. Expression of the three largest creditors, excluding related persons.
What are the stages of the Bankruptcy Reorganization Procedure?
The stages are as follows:
a) Presentation before the competent court of the request to start the Reorganization Bankruptcy Procedure ,
b) Request for nomination of Veedor before the Superintendency of Insolvency and Reopening.
c) Dictation by the court of the resolution of reorganization / initiation of the Bankruptcy Financial Protection ,
d) Presentation of the proposed Reorganization Agreement ,
e) Verification , objection and challenge stage of creditors' credits,
f) Meeting of Creditors called to know and pronounce on the proposed Reorganization Agreement , and
g) Approval of the Judicial Reorganization Agreement.
Bankruptcy financial protection?
It is that period of time between the issuance of the reorganization resolution and the Reorganization agreement granted to the Debtor Company subject to the Reorganization Bankruptcy Procedure , during which its liquidation cannot be requested or declared, nor can executive trials, executions be initiated against it. of any kind or restitution in lease lawsuits . In addition, all contracts signed by the debtor will maintain their validity and payment conditions. Consequently, they may not be terminated early unilaterally , their compliance required in advance or the contracted guarantees be made effective, invoking as cause the initiation of a Reorganization Bankruptcy Procedure.
The debtor during this period may not transfer and / or encumber his assets.
How does the procedure end?
The procedure can end in two ways:
a) Approved the Reorganization Agreement , or
b) Rejected the Reorganization Agreement .
In these matters, we advise individuals, independent property brokers, and also companies, real estate and construction.
2) Bankruptcy Procedure of the Debtor Company:
If the insolvency crisis is so pronounced that the company itself has become economically unviable, it is of paramount importance that the entrepreneur that an unnecessary postponement of the decision to close his business, can worsen the situation not only of the company and its creditors, but also that of the entrepreneur himself and his workers. Definitively lowering the curtain, without making a formal and orderly closure of the company, can become a heavy backpack that will prevent the entrepreneur from getting up again. On the contrary, the closure of a company through liquidation allows the completion of a project in an orderly manner, while respecting the rights of its workers and creditors . For this, it is necessary to have the legal advice of a specialist lawyer .
The Liquidation of Companies is a judicial procedure whose object is the quick and efficient sale of the assets of the Debtor Company that has become economically unfeasible, in order to pay its creditors.
The law understands that for these purposes companies are considered legal entities under private law, with or without profit ; as well as natural persons who are First Category taxpayers or article 42 No. 2 of the Income Tax Law (honorary tickets).
With limited deadlines (12 months approx.), The settlement allows Debtors to correct their financial situation , extinguishing the unpaid balance of the debts , encouraging the creation of new ventures. On the other hand, it establishes certain tax benefits for the creditor.
As it is a judicial procedure, it requires the sponsorship of a specialist lawyer , but the Liquidator's fees are paid out of the seized assets and eventually, in the event of their insufficiency, they are charged to the budget of the Superintendency .
Links of interest on the Restructuring and Liquidation of Companies :
1.- Civil Code of the Republic of Chile
2.- Insolvency and Re-entrepreneurship Law (Law No. 20,720)
3.- Superintendency of Insolvency and Re-entrepreneurship
Wolfenson Lawyers. Chile Law Firm.
If you need more information and legal advice in the insolvency and bankruptcy procedure of companies, we invite you to contact our lawyers in Santiago. We are located at Avenida Apoquindo 2930 in the commune of Las Condes, Santiago de Chile.