Best Restructuring & Insolvency Lawyers in Costa Rica

About Restructuring & Insolvency Law in Costa Rica

Restructuring and Insolvency law in Costa Rica is the body of legal principles, regulations, and procedures designed to help individuals and companies that are unable to meet their financial obligations. These laws enable businesses or individuals facing financial distress to either reorganize their operations and debts through formal restructuring or, if that is not possible, to undergo an orderly liquidation of assets to satisfy creditors. Costa Rica has modernized its insolvency framework to provide more efficient solutions in line with international standards, aiming to balance the interests of debtors and creditors while promoting economic recovery and creditor repayment.

Why You May Need a Lawyer

Navigating restructuring or insolvency situations can be complex and overwhelming. Legal advice is crucial in the following common circumstances:

• You are struggling to pay your debts or anticipate insolvency in your company or personal finances.
• You are a creditor and seek to recover unpaid amounts from a debtor.
• Your business seeks court protection to reorganize debts and operations to remain viable.
• You need to understand your rights and obligations during bankruptcy or insolvency proceedings.
• You want to negotiate new terms with creditors or find alternative dispute resolution methods.
• You face lawsuits or enforcement actions due to unpaid debts.
• You wish to avoid personal liability as a business owner or director during insolvency.

A lawyer can guide you through each step, represent you in court, negotiate with stakeholders, and ensure all legal requirements are properly met according to Costa Rican law.

Local Laws Overview

Costa Rica has implemented important reforms to its restructuring and insolvency legal framework. The main law governing insolvency proceedings is the Ley Concursal, enacted in 2020, which replaced the former bankruptcy law. Key aspects include:

• Availability of preventive reorganization and judicial liquidation procedures.
• The debtor can apply for insolvency voluntarily, or creditors can initiate proceedings in certain circumstances.
• Once a court accepts the insolvency petition, an automatic stay on creditor actions is generally imposed.
• The appointment of a court-approved trustee or insolvency administrator to oversee the process.
• Creditors are grouped according to their claim type and given specific rights to participate and vote.
• Restructuring agreements must be approved by a majority of creditors and confirmed by the court.
• Directors and key decision-makers have certain duties and responsibilities, especially in the zone of insolvency.
• The system includes specific procedures for cross-border insolvencies and international cooperation.

These provisions aim to increase fairness, transparency, and efficiency, ensuring a clear process for both debtors and creditors.

Frequently Asked Questions

What is the difference between restructuring and insolvency in Costa Rica?

Restructuring involves reorganizing a debtor's finances and business to allow continued operations while settling debts with creditors. Insolvency (bankruptcy) generally leads to the liquidation of the debtor's assets to pay off creditors when recovery is not feasible.

Who can file for insolvency in Costa Rica?

Both individuals and legal entities (such as companies) can file for insolvency. Creditors may also file an insolvency petition against a debtor under certain conditions detailed in the Ley Concursal.

What are the main steps in the insolvency procedure?

The process typically involves filing a petition, a court review, granting of automatic stay, appointment of an administrator, creditor notification and meetings, and either approval of a restructuring agreement or commencement of liquidation.

How long do insolvency proceedings usually take?

The timeline varies depending on the complexity of the case and whether restructuring or liquidation is pursued. On average, cases may take several months to two years or more.

What is an automatic stay and how does it work?

An automatic stay is a court-ordered halt on all collection and enforcement activities against the debtor during insolvency proceedings, giving them protection and time to propose solutions.

Are directors or owners personally liable for company debts during insolvency?

Generally, company owners and directors are not personally liable for company debts unless there is evidence of fraud, negligence, or certain prohibited acts outlined in the law.

Can I negotiate with creditors outside of court in Costa Rica?

Yes, out-of-court settlements and informal agreements are possible and sometimes encouraged before or alongside formal proceedings. A lawyer can help negotiate and draft such agreements.

What happens to employees during insolvency?

Employees are considered preferred creditors and have certain rights regarding unpaid wages and benefits. In liquidation, their claims are typically prioritized.

Can foreign creditors participate in insolvency proceedings?

Yes, foreign creditors have the right to participate and present their claims. Costa Rican law also provides for international cooperation in cross-border insolvencies.

How can I find out if a business is in insolvency proceedings?

Insolvency proceedings are recorded with the local courts and relevant public registries. Interested parties, including creditors and potential business partners, can inquire about these records through legal channels.

Additional Resources

For more information and assistance, consider consulting these Costa Rican entities and resources:

• Judicial Branch of Costa Rica (Poder Judicial) - handles insolvency cases through commercial courts
• Registro Nacional - maintains public records related to legal entities and insolvency proceedings
• Superintendency of Financial Institutions (SUGEF) - oversees financial sector issues, including some aspects of insolvency for regulated entities
• Costa Rican Bar Association (Colegio de Abogados y Abogadas de Costa Rica) - find directory of qualified insolvency lawyers
• Commercial Chambers and business support organizations - sometimes offer guidance and mediation services

Consulting an experienced local attorney remains the most reliable resource for up-to-date and case-specific advice.

Next Steps

If you suspect that you or your business may be facing insolvency, or if you are trying to recover debts from a debtor, prompt action is important. Here is how you can proceed:

• Gather all financial documents, contracts, and debt records related to your situation.
• Contact a Costa Rican lawyer experienced in restructuring and insolvency law for an initial consultation.
• Discuss your circumstances and clarify your objectives and available legal options.
• If needed, your lawyer will help you prepare and file the appropriate petitions or negotiate with creditors.
• Stay proactive and keep track of all deadlines and legal requirements throughout the process.

Taking these steps early can increase your options and improve outcomes for both debtors and creditors. An experienced legal professional will help ensure your rights are protected and that you comply with all relevant legal obligations under Costa Rican law.