[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN CHILE] 23
KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER CHILEAN LAW I- Introduction
insolvency proceedings, controlling the role of trustees and liquidators. There is also a rehabilitation proceeding for individuals which is processed before the Agency. This Agency manages the Insolvency Gazette, where the most important insolvency orders are published. The next sections will describe the main features of insolvency proceedings in Chile, before analyzing other interesting matters, namely, Chilean rules on restitutionary remedies, insolvency criminal offences and ineligibility of directors, cross-border insolvency and tax aspects. II- Insolvency proceedings 1) Reorganization of Companies a) Judicial Reorganization
Law N° 20.720 on Reorganization and Liquidation (“The Law”) modernized insolvency proceedings in Chile, promoting the rehabilitation (reorganization) of companies and individuals, balancing the interests of both creditors and debtors to renegotiate debts. The Law entered into force in October 2014, and since its first decade of application some minor reforms have been implemented. Accordingly, one of its principal aims is to encourage the restructuring of debts, as debtors can obtain stays of proceedings and continue trading under the supervision of a trustee. Debtor´s essential suppliers are payable in their original terms and conditions, which facilitates the continuity of business. The exchange with essential suppliers will be considered a secure credit in case of liquidation. It is essential for the success of the reorganization that the debtor receives the creditors´ support. The creditors act and vote in creditors´ meetings and the Law protects the principle of equality of creditors ( par conditio creditorum ). However, main creditors have important rights as well, for instance, in appointing the trustee/liquidator and in renewing the period of protection for the debtor. If the creditors reject the reorganization plan, the debtor goes into liquidation. As a result, the Law considers liquidation as a last resource and an appropriate proceeding for inviable debtors. Although some exceptions, insolvency proceedings are submitted before Civil Courts (there are not full-time courts dedicated exclusively to bankruptcy in Chile). The Law also created the Insolvency and Reorganization Agency (“the Agency”), which inspects the adequate implementation of the
The debtor may file a reorganization request to restructure its debt. In doing so, the debtor should submit the following documents:
A list of all its assets, including a commercial assessment, disclosing their location and whether they are subject to any guarantee. A certificate subscribed by an independent auditor with a list of its debts, including the name, address, contact information, and the percentage of every creditor on the debt, expressing who the 3 main creditors are, excluding related creditors.
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Accounting
books
and
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accurate
financial
information. Likewise, the debtor has to request the Agency the appointment of a
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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