Insolvency And Bankruptcy Rules In Argentina

Introduction

The Argentine Bankruptcy Law No 24,522, as amended (the

'Bankruptcy Law'), contemplates three main insolvency

proceedings.

Two of them seek to prevent such bankruptcy, ie, the

reorganisation proceeding, and the out-of-court reorganisation

agreement or APE as it is known in Argentina. The other procedure

stipulated by the Bankruptcy Law is the proper bankruptcy

proceeding, that is a judicial proceeding aimed to liquidate the

relevant party's assets and pay off the outstanding debt.

If the reorganisation procedure as such were not to go through,

there is another possibility and that is the cram-down or corporate

reorganisation that has not been widely used in Argentina.

Most debtors in Argentina are reorganised through the

reorganisation proceeding, which is completely judicial, although,

after the massive devaluation in Argentina in 2002, many public

companies with indebtedness subject to foreign jurisdiction and

some private companies highly indebted in hard currency subject to

foreign jurisdictions have chosen the out-of-court reorganisation

agreement to restructure their indebtedness. This out-of-court

reorganisation agreement between all or some of the creditors and

the debtor, which takes place before entering reorganisation or

liquidation proceedings and – subject to court approval

– is effective vis-à-vis other

creditors.

The general provisions of the Bankruptcy Law apply to both legal

entities and individuals, including, without limitations, business

organisations in which the state is a shareholder. There are,

however, certain exceptions made in the case of financial

institutions and some difference in treatment concerning public

utilities, pension and social security ...

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