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Restructuring and insolvency law in Chile is designed to provide both individuals and companies facing financial difficulties with legal mechanisms to manage debt and, if necessary, liquidate assets in a fair and orderly manner. The main goal of this area of law is to preserve viable businesses, ensure the satisfaction of creditors to the greatest extent possible, and safeguard the economic interests of all relevant parties. In recent years, Chile has modernized its approach to insolvency, offering procedures that promote reorganization, transparency, and efficiency in addressing financial distress.
People and businesses may require legal assistance with restructuring and insolvency for a variety of reasons. Common scenarios include:
A lawyer experienced in Chilean restructuring and insolvency law can help you assess your options, ensure compliance with local regulations, and represent your interests throughout negotiations or court proceedings.
The primary legal framework for restructuring and insolvency in Chile is the Chilean Insolvency Law, known as the "Ley de Reorganización y Liquidación de Empresas y Personas" (Law No. 20.720). The law provides for two main procedures:
Key elements of the Chilean insolvency framework include the appointment of insolvency trustees, automatic stays on creditor actions once proceedings begin, creditor committees, and strict timelines to expedite processes. The law also sets out the rights of both secured and unsecured creditors, and provides for special treatment of labor claims and tax obligations.
Insolvency occurs when an individual or business cannot meet its financial obligations as they become due. Chilean law provides mechanisms to address both temporary and permanent insolvency.
Both individuals and companies can access reorganization and liquidation procedures under the current Chilean insolvency law, provided certain eligibility criteria are met.
Reorganization aims to restructure debts and allow continued economic activity, whereas liquidation results in the sale of assets and distribution of proceeds to creditors, effectively ending the debtor's operations.
Once formal insolvency proceedings commence, an automatic stay prevents creditors from pursuing collection actions, lawsuits, or enforcements against the debtor's assets during the process.
Most debts are included, but some, such as child support obligations or certain fines, may be treated differently or excluded. A lawyer can help clarify what applies to your case.
Chilean law establishes an order for repayment, giving first priority to secured creditors and certain labor claims, followed by tax authorities and then unsecured creditors.
Yes, under reorganization proceedings, businesses can usually continue operating under supervision if the court approves the plan, provided they comply with legal requirements.
Timelines vary according to the complexity of the case and the type of proceeding. Liquidations are often faster, while reorganizations can take several months or more.
Yes, creditors can vote on reorganization plans. Approval requires a certain majority, and the plan must meet legal criteria to become binding.
After liquidation, any remaining unpaid debts are generally extinguished for the debtor, except in cases involving fraud or certain excluded obligations.
If you are seeking further information or assistance relating to restructuring and insolvency in Chile, consider the following resources:
If you believe you need legal help related to restructuring or insolvency in Chile, consider taking these steps:
Professional legal advice is crucial - each case is unique, and the right guidance can help preserve your interests and navigate the complexities of Chilean restructuring and insolvency law.
