Search
Close this search box.

Economic Insolvency in Colombia

migracion-colombia-cedula-de-extranjeria

This figure was initially created for companies in 2006 and was later extended to individuals in 2012. It is a special regime that applies to both individuals and companies that have incurred in arrears. The purpose of this plan is for the debtor to agree with its creditors on a favorable payment plan, through which it can effectively comply with its obligations.

Statistics:

During 2020, 2,222 insolvency applications were filed, a figure that increased in 2021 with a total of 3,213 applications and, during 2022 increased even more with a total of 4,382 applications filed. So far in 2023, 576 applications have been submitted.

Economic insolvency for individuals:

For individuals, it is regulated by Law 1564 of 2012. This is a special regime to which any non-trading natural person may submit, which allows the person to hold an out-of-court conciliation hearing with its creditors in which they establish a payment agreement. This regime is not applicable to proceedings relating to maintenance obligations.

This rule is not applicable to non-trading individuals who are part of groups of companies or who manage and/or own commercial companies.

The agreements permitted by this Law must be carried out in conciliation centers located in the debtor’s domicile and expressly approved by the Ministry of Justice, and must be mediated by conciliators registered in the lists of such centers. They can also be carried out in notary’s offices that are also located in the debtor’s domicile and must be conciliators registered in the list of the specific notary’s office.

If there are no notaries or authorized conciliation centers in the debtor’s domicile, the debtor may choose a conciliation center or authorized notary’s office located within the same circuit or circle respectively.

Attorneys may not hear such proceedings unless specifically appointed by the conciliation center.

Economic Insolvency for Companies:

For companies, it is regulated by Law 1116 of 2006. By means of this Law, the Colombian government seeks to protect the credit of companies and also to recover and preserve the company as a unit of economic exploitation and also as a source of employment generation. This process is foreseen under the criterion of value addition.

This special regime is applicable to individuals and companies that are not expressly excluded from it. The companies to which it applies must have a permanent economic activity within the Colombian territory and may be of a private or mixed nature. It also applies to branches of foreign companies and to autonomous patrimonies through which business activities are carried out.

The legal entities excluded from this regime are listed in Article 3 of Law 1116 of 2006, which can be accessed through the following link: https://www.sic.gov.co/recursos_user/documentos/normatividad/Ley_1116_2006.pdf. These include EPS, IPS and other entities belonging to the Social Security System, entities that are supervised by the Financial Superintendency of Colombia, among others.

Likewise, this regime is not applicable to public law entities, territorial and decentralized entities.

REFERENCES:

Leave a Comment