Congress Approves Bill Expanding Mechanisms for Accessing Insolvency Process

In June 2024, the Congress of the Republic approved, in its fourth and final debate, Bill 106 of 2024 from the Senate and 365 of 2024 from the House of Representatives. This bill aims to expand and make permanent the mechanisms developed during the pandemic for businesses and entrepreneurs to access insolvency processes before the Superintendency of Companies.

While Law 1116 of 2006 regulates the corporate insolvency regime in Colombia and has been the governing norm to date, this new legislation seeks to incorporate additional benefits into the existing insolvency regime and establish processes for access. In this regard, the approved bill aims to make permanent and include in Colombian law Decree 560 of 2020 and Decree 772 of 2020—regulations that emerged during the pandemic to support businesses facing difficulties.

On one hand, Decree 560 of 2020 regulates the Emergency Negotiation of Reorganization and Business Recovery Agreements (NEAR), which is an abbreviated reorganization process lasting a maximum of three months. During this period, the creditor must present their credit graduation proposal, and creditors must submit their objections before the agreement is presented to the judge for confirmation. Within these three months, creditors and the debtor will have the opportunity to negotiate their credits. On the other hand, Decree 772 of 2020 regulates the mechanisms for protecting companies during business reorganization processes and expedited liquidation recovery mechanisms. This regulation aims to establish strategies for value recovery in liquidation processes. Both regulations are focused on micro and small enterprises [1].

Therefore, the Congress of the Republic has recognized the need to establish these measures permanently, with the goal of ensuring and facilitating the functioning of businesses and economic reactivation. This does not mean that Law 1116 of 2006 will cease to apply; rather, this new legislation will be complementary and applicable to specific cases, aiming to harmonize the regulations.

————————————–

For further information, please do not hesitate to contact Brick Abogados if you have any questions or would like more details on the topic discussed above.

This document is for informational purposes only and does not constitute legal advice, nor does it engage the responsibility or professional opinion of Brick Abogados.