[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN CHILE] 24
trustee (and a substitute trustee). This process is conducted before the Agency with the participation of the 3 main creditors. Having appointed the trustee, the Court issues the reorganization order, which legal effects are as follows:
New financers are paid in the agreed terms and will be secured credits in case of liquidation (similar to the debtor in possession figure). The order establishes the date of the creditors´ meeting, where the reorganization plan will be voted. The creditors have 15 days from this order to demonstrate before the Court their power of attorney to approve, modify or reject the reorganization plan. This is necessary to participate in the creditor´s meetings. Similarly, the creditors can claim their credits within 15 days if they do not agree the amount and category established in the debtor´s list.
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The debtor is granted a 60- day stay of proceedings. This term can be extended for another 60 days with the acquiescence of 2 or more creditors which represent at least 30% of the debt, excluding related creditors. Similarly, this term can be extended for an additional 60 days if 2 or more creditors, which represent more than 50% of the debt approves the extension, excluding related creditors. The reorganization is not ground for early termination of contracts. This means that creditors should comply with contracts entered into with the debtor, otherwise the credits are postponed. The under supervision of the trustee and has several limitations to render new guarantees, sell assets, and modify its articles of association. debtor is Although the debtor can raise new funds, there are limitations. The new credits cannot exceed the 20% of its debts, unless 30% or more of the creditors accept this, excluding related creditors.
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The debtor is free to prepare its reorganization plan, considering the foregoing limitations but negotiation is necessary to obtain creditors´ acceptance. The trustee has to submit a report to suggest the approval or rejection of the reorganization plan, at least 3 days before the creditors´ meeting. In order to succeed, the reorganization plan requires the support of at least 66% of the creditors with right to vote - excluding related creditors-, considering the different categories (secured, unsecured credits) in which the plan is divided.
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ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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