Best Restructuring & Insolvency Lawyers in Colombia

About Restructuring & Insolvency Law in Colombia, Colombia

Restructuring and insolvency law in Colombia provides a structured legal framework for businesses and individuals facing financial distress. The goal is to offer relief while maximizing creditor recovery and protecting jobs and economic value. The Colombian legal system recognizes both court-led and out-of-court processes for dealing with financial difficulties. Entities can either restructure their obligations with the assistance of creditors or pursue liquidation when restructuring is not feasible. Understanding how these procedures work is essential for both debtors and creditors to make informed decisions and comply with legal obligations.

Why You May Need a Lawyer

Restructuring and insolvency cases can be complex and involve numerous legal and procedural steps. You may need a lawyer if you are:

• A business owner unable to pay debts and seeking restructuring or liquidation options
• A creditor needing to recover amounts owed from an insolvent debtor
• An individual with significant personal debts at risk of foreclosure or asset seizure
• A stakeholder in a company entering into insolvency proceedings
• Navigating cross-border insolvency issues with assets or debts in multiple jurisdictions
• Dealing with disputes among creditors or issues relating to the ranking of claims

A specialized lawyer can help protect your interests, ensure compliance with Colombian law, and advocate before the relevant authorities or courts.

Local Laws Overview

The cornerstone of restructuring and insolvency in Colombia is Law 1116 of 2006, which regulates corporate insolvency proceedings. This law is designed to allow companies experiencing financial hardship to reach agreements with creditors and continue operating. For individuals, insolvency processes are governed by Law 1564 of 2012, specifically in the Código General del Proceso (General Code of Procedure).

Key aspects of Colombian restructuring and insolvency law include:

• Voluntary and involuntary insolvency proceedings for both companies and individuals
• Automatic stay on enforcement actions upon the initiation of proceedings
• Appointment of a restructuring promoter or liquidator by the Superintendency of Companies
• Negotiation of payment plans or restructuring agreements between debtors and creditors
• Debt prioritization and the order of payment distribution in liquidation
• Recognition of foreign insolvency proceedings under certain conditions

These laws are enforced and supervised by entities such as the Superintendencia de Sociedades (Superintendency of Companies) and judicial courts.

Frequently Asked Questions

What is the difference between restructuring and liquidation in Colombia?

Restructuring focuses on helping a financially troubled company or individual reach an agreement with creditors to reorganize debt and continue operating. Liquidation, on the other hand, involves winding up the company’s operations, selling assets, and distributing the proceeds to creditors.

Who can initiate insolvency proceedings in Colombia?

Both debtors and creditors may initiate insolvency proceedings. For companies, the process is usually started by the debtor when they foresee their inability to pay debts, but creditors can also request it under certain conditions.

What happens once insolvency proceedings start?

An automatic stay takes effect, temporarily halting most enforcement actions against the debtor. This allows time for negotiation and assessment of the debtor’s financial situation.

Are individuals eligible for insolvency protection?

Yes, individuals who cannot meet their debt obligations can access insolvency protection through special proceedings regulated by the Código General del Proceso.

What is a restructuring agreement?

It is a legally binding contract between the debtor and its creditors, outlining how the debtor will restructure or repay outstanding debts over a specified period, often with negotiated changes to terms and interest.

Can foreign creditors participate in Colombian insolvency proceedings?

Foreign creditors have the same rights as domestic creditors in Colombian insolvency proceedings, subject to proper legal representation and recognition of claims.

How are creditor claims prioritized in liquidation?

Colombian law establishes a specific order for paying creditors, typically starting with labor claims, secured creditors, and tax liabilities, followed by unsecured creditors.

What role does the Superintendency of Companies play?

The Superintendency of Companies oversees, administers, and approves most restructuring and liquidation proceedings involving Colombian companies.

Can a restructuring process be converted into liquidation?

Yes, if restructuring fails or is deemed unviable, the process can be converted into liquidation, either by creditor request or at the authority’s discretion.

What are the risks of entering into insolvency proceedings?

Risks include possible loss of control over assets, damage to business reputation, restrictions on business activities, and in some cases, personal liability for administrators if misconduct is proven.

Additional Resources

If you need more information or guidance on restructuring and insolvency in Colombia, consider reaching out to:

• Superintendencia de Sociedades (Superintendency of Companies) - The main regulatory authority for corporate insolvency
• Colombian Bar Association - For finding accredited legal professionals
• Ministry of Commerce, Industry and Tourism - Publications and regulations on commercial matters
• Chambers of Commerce - Local support and business directories
• Centro de Conciliación y Arbitraje (Conciliation and Arbitration Centers) - Mediation and dispute resolution services

Next Steps

If you are facing financial difficulties or are a creditor seeking to protect your rights, consider taking the following steps:

1. Document your financial situation, including debts, assets, and ongoing business operations
2. Consult with a qualified restructuring and insolvency lawyer to assess your situation and determine the best course of action
3. Gather all contracts, financial statements, and relevant correspondence for legal review
4. Engage with stakeholders early to explore potential out-of-court solutions where possible
5. Follow legal advice for preparing and submitting the necessary filings if entering formal proceedings
6. Keep open communication with your lawyer and cooperate with relevant authorities and creditors throughout the process

Professional guidance is essential to navigating the complex landscape of restructuring and insolvency law in Colombia. Taking timely action and obtaining expert advice will help you protect your interests and work toward the best possible outcome.