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not offered enough assets to pay its debts within 4 days after service. b) If the debtor has closed its headquarters/offices and the location of its managers is unknown, provided that the company has not left any representative to respond to claims and its obligations. This ground only applies to micro entities and not to individuals. The Law also grants the debtor stays of proceedings in the context of summary applications. III- Restitutionary remedies The Law provides remedies for creditors and the trustee/liquidator to recover assets/money transferred by the debtor to third parties in prejudice of its creditors in an insolvency scenario. Depending on the ground, these remedies seek the restitution of assets in connection to transfers or contracts entered into by the debtor between 1 and 2 years before the liquidation/reorganization order. IV- Criminal offences and ineligibility of directors The Law establishes criminal offences for debtors, where they have entered into contracts to diminish their assets with the clear purpose of damaging their creditors. Also, there are criminal offences for debtors, where they hide their assets or provide false information to the trustee/liquidator, and where the debtor has not complied with its obligations of maintaining accurate accounting books and financial information before 2 years of the liquidation/reorganization order. Liquidators and trustees might commit criminal offences where they obtain unlawful benefits in insolvency proceedings. Individuals who have committed insolvency criminal offences are ineligible as directors of
The debtor can continue its business under certain circumstances. All credits against the debtor are duly enforceable, even though they were originally subject to instalments or deadlines.
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The Law discharges the debtor from the outstanding debts that cannot be paid after the liquidation of its assets. 3) Renegotiation for individuals Individuals may file an application for a renegotiation proceeding before the Agency, where they have 2 or more outstanding debts for more than 90 days in connection with 2 or more creditors. It is necessary that the amount of the debt exceeds a threshold (circa USD 3,000). During the renegotiation of its debt, the debtor is granted stays of proceedings. 4) Summary Reorganization and Liquidation for Micro-entities Micro-entities and small companies may apply for summary reorganization or voluntary liquidation. The aim is to establish cost-effective alternatives to either renegotiate or liquidate the debts of small- scale enterprises. Individuals have also the option of applying for voluntary summary liquidation. A creditor is entitled to commence a forced summary liquidation proceeding against a micro-entity or an individual. There are 2 grounds for forced summary liquidation: a) If there are 2 or more outstanding debts established in executive titles, provided that 2 or more debt collection proceedings against the debtor have been commenced, and the debtor has
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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