Best Restructuring & Insolvency Lawyers in Colombia

About Restructuring & Insolvency Law in Colombia, Colombia

Restructuring and insolvency law in Colombia provides the legal framework for businesses and individuals facing financial distress. These regulations are designed to help debtors reorganize or liquidate assets in an orderly manner, ensuring fair treatment for creditors and the possibility of business recovery when feasible. Colombia has modernized its insolvency regulations in recent years, aligning its standards with international best practices. These laws are overseen by specialized courts and institutions, with the aim of maintaining economic stability and protecting stakeholders' rights during financial crises.

Why You May Need a Lawyer

Navigating restructuring and insolvency processes can be complex and stressful. Some common situations where legal advice is crucial include:

• You are facing overwhelming debt and cannot meet your financial obligations.
• Your business is at risk of bankruptcy and you need to explore recovery options.
• Creditors are initiating collections or legal actions against you or your company.
• You are a creditor seeking to recover debts from an insolvent debtor.
• You need to negotiate with creditors or restructure your financial commitments.
• Legal proceedings require you to file or respond to insolvency petitions.
• You want to ensure compliance with all relevant legal procedures and protect your assets.
• You need guidance on the impact of insolvency on contracts or ongoing business operations.

An experienced lawyer can help assess your situation, explain your options, represent your interests, and guide you through each step of the restructuring or insolvency process.

Local Laws Overview

Colombian restructuring and insolvency laws are primarily governed by Law 1116 of 2006, known as the “Insolvency Regime.” This law applies to both companies and individuals engaged in commercial activities. Its main objectives are to protect the credit system, preserve viable companies, and ensure a fair liquidation process for non-viable entities.

Key aspects include:

• Insolvency Proceedings: Two main procedures exist: business reorganization (aimed at preserving the company, negotiating payment terms, and restructuring obligations) and judicial liquidation (orderly asset sale and debt distribution).
• Voluntary and Involuntary Filing: Debtors can file voluntarily for protection, or creditors may request the commencement of proceedings if certain legal requirements are met.
• Protection from Creditors: Once proceedings start, creditors are barred from initiating or continuing individual legal actions and collection efforts against the debtor.
• Roles of the Superintendence of Companies: The Superintendence of Companies in Colombia acts as the main authority overseeing insolvency processes, especially for companies and merchants.
• Negotiation and Plan Approval: In reorganization cases, a plan is negotiated with creditors under judicial supervision, and approval binds all parties.
• Liquidation: For non-viable businesses, liquidation involves the sale of assets and proportional payment to creditors according to priority rules set by law.
• Cross-Border Recognition: Colombian law provides for recognition of foreign insolvency proceedings, subject to local rules.

Understanding these procedures and their implications is essential before entering any insolvency or restructuring process in Colombia.

Frequently Asked Questions

What is business reorganization in Colombia?

Business reorganization is a legal process that allows financially distressed companies to renegotiate their debts and restructure their operations under court supervision, with the objective of preserving the company and protecting jobs.

Who can request insolvency proceedings in Colombia?

Both debtors and creditors have the right to file for insolvency proceedings. The process can be voluntary, initiated by the debtor, or involuntary, initiated by one or more creditors.

What is the role of the Superintendence of Companies?

The Superintendence of Companies is the regulatory authority that administers and supervises most insolvency proceedings for commercial entities in Colombia, ensuring that legal standards are followed.

How are creditors prioritized in Colombian insolvency procedures?

Creditors are classified into categories with established priorities. Labor claims, taxes, and secured creditors generally receive payment before unsecured creditors during liquidation.

Can individuals (non-companies) file for insolvency?

Yes, individuals who are merchants or have substantial economic activity can participate in insolvency processes under Colombian law. There are separate mechanisms for non-merchant individuals facing insolvency.

What protections does a company gain after initiating insolvency proceedings?

Once accepted, insolvency proceedings grant the debtor protection from individual lawsuits, asset seizures, and enforcement actions, allowing space to negotiate solutions with creditors.

Does entering insolvency mean the business must close?

Not always. Reorganization proceedings aim to help the business recover and continue operating. Only if recovery is not viable will judicial liquidation and closure be considered.

How long does an insolvency process typically last?

The duration varies depending on complexity, number of creditors, negotiations, and court schedules. Business reorganization can take several months to a few years, while liquidation may be completed more quickly.

Can debts be forgiven in a restructuring process?

Debts are typically renegotiated for new terms, but partial forgiveness is possible if agreed to by creditors within the restructuring plan. The aim is to reach a sustainable debt level for the business or individual.

How can a lawyer help with restructuring and insolvency?

A lawyer can evaluate your financial situation, advise on the right type of legal process, prepare and submit required documents, represent you in negotiations or court, and protect your legal rights throughout the process.

Additional Resources

The following entities and resources can be helpful for anyone dealing with restructuring and insolvency issues in Colombia:

• Superintendence of Companies (Superintendencia de Sociedades): The primary authority for insolvency matters related to merchants and companies.
• Chamber of Commerce: Offers guidance and support for local businesses, including information on insolvency procedures.
• Ministry of Commerce, Industry, and Tourism: Publishes updates and educational materials related to commercial regulations and insolvency laws.
• National Legal Aid Centers: Provide assistance for individuals unable to afford private legal counsel.
• Professional Bar Associations: Can help you find qualified insolvency attorneys specializing in this field.

Next Steps

If you require legal assistance for restructuring or insolvency in Colombia, consider the following steps:

1. Evaluate your financial situation and gather relevant documents such as financial statements, contracts, and debt records.
2. Consult with a lawyer specializing in insolvency and restructuring law to discuss your options and the best strategy for your case.
3. If you decide to proceed, your lawyer will help you prepare and file the necessary petitions, and represent you in negotiations or court proceedings.
4. Stay informed and comply with all requirements set forth by the courts or the Superintendence of Companies.
5. Consider accessing resources from government agencies or professional associations for further support and information.

Taking timely legal advice is crucial to protecting your interests and achieving the best possible outcome during financial distress. Do not hesitate to seek professional guidance as soon as possible.