Ley 9957 — Costa Rica Bankruptcy Law

Insolvency Law of Costa Rica No. 9957 THE LEGISLATIVE ASSEMBLY OF THE REPUBLIC OF COSTA RICA

INSOLVENCY LAW OF COSTA RICA

DECREES:

CHAPTER ONE

GENERAL PROVISIONS

SECTION I: PURPOSE AND PRINCIPLES

This law is intended to determine and implement just and functional solutions to the financial crises of private debtors contemplated herein, which prevent them from normally fulfilling their obligations.

In resolving insolvency situations, following criteria of proportionality and reasonableness, the following shall be pursued in a harmonious and balanced manner:

1)Reestablishing and, where applicable, ensuring the viability of companies.
2)Preserving, if possible, the unity of the insolvency estate (patrimonio concursado).
3)Organizing the payment of the insolvent party's (concursado) debts, through the effective protection of the interests of the creditors that make up the estate (masa).
4)Respecting the principles of equality and proportionality in the treatment of creditors of the same class, except in cases of exception expressly established by law.

This law shall apply to private debtors in an insolvency situation, who shall be subject to a single insolvency process, except for legal provisions established for special cases.

In addition to the principles regulated by procedural and substantive regulations, the following shall be observed in the application of insolvency law:

Equality Except for special provisions established by law, creditors of the same class shall be treated equally and proportionally regarding their claims in the insolvency proceeding, regardless of the maturity and source of the obligations.

Objective universality The insolvency proceeding affects all legally attachable assets of the insolvent party (concursado), with the exclusions established by law.

Subjective universality All creditors of monetary obligations of the insolvent party (concursado), whatever their nature, nationality, or domicile, shall be included in the passive estate (masa pasiva) of the insolvency proceeding, subject to the regime of this law, and must exercise their credit rights in the insolvency process, without prejudice to legal norms that allow exercising them outside of it.

Official impetus In the processing of insolvency processes, jurisdictional bodies must act with the greatest possible speed, drive the process until its conclusion, and seek in a balanced manner the effective protection of the rights of creditors, the debtor, and other legitimate interested parties. They may order, even on their own motion (de oficio), the precautionary measures necessary for this purpose.

Public and social interests The Office of the Attorney General of the Republic (Procuraduría General de la República) and the Office of the Ombudsman (Defensoría de los Habitantes) may intervene in the insolvency proceeding when they deem that there are relevant public or social interests to protect.

When it considers it necessary, according to the circumstances, the competent court must notify them of the existence of the insolvency proceeding.

Preservation of the company (conservación de la empresa) In the insolvency process, the preservation and rescue of productive economic activities shall be pursued.

The improper or negligent actions of the business owners, partners, legal representatives, administrators, employees, and other company auxiliaries shall not prevent its preservation and rescue when it is viable.

Fundamental rights of the insolvent party (concursado) and their representatives The declaration of insolvency does not entail limitations or restrictions on the fundamental rights of the insolvent person (persona concursada) or their representatives.

Natural persons subject to insolvency proceedings (personas físicas concursadas) shall retain their capacity to carry out acts of a personal and patrimonial nature, regarding assets excluded from the insolvency proceeding according to the law.

When restrictions or disqualifications of the rights of the insolvent person (persona concursada) are applicable under this law, they must be interpreted restrictively and always in line with the objectives of the insolvency process.

The indicated persons shall continue with their procedural capacity to participate in the insolvency proceeding. They may assist in other processes in which they have an interest and the insolvency estate (concursado) is a party, even when the insolvency representation is granted to other persons.

Cooperation and good faith The insolvent person (persona concursada), their legal representatives or agents, administrators, liquidators, and executors have the duty to appear before the competent court and before the insolvency administrator, supervisor, or liquidator, as many times as required. They must also collaborate and inform of everything necessary for the interest of the insolvency proceeding. These duties shall fall upon those who held such positions within the two years prior to the declaration of insolvency.

Insolvency flexibility The court, even on its own motion (de oficio), may adjust procedures to pursue the purposes of the insolvency proceeding in the best possible manner.

The supervisors (interventores), administrators, and liquidators, in carrying out the corresponding insolvency activity, shall not be subject to rigid formalities and may act in the way most conducive to achieving insolvency objectives.

In any case, insolvency bodies must respect mandatory rules and the rights of third parties.

SECTION II

PRESUPPOSITIONS

Subjects susceptible to insolvency proceedings The following may be subject to insolvency proceedings:

1)Natural persons, regardless of their habitual activity, profession, or trade.
2)Estates (sucesiones).
3)Private legal entities, regardless of their nature, purpose, or activity, except entities expressly excluded by special law.
4)Legal entities in the phase of dissolution or liquidation.

Prevalence of the insolvency regime regarding estates, dissolutions, and liquidations In the case of the insolvency of an estate or a legal entity in the stage of dissolution or liquidation, the insolvency process shall be processed first, and once it is concluded, if there is a remainder of assets, the corresponding succession or liquidation process shall continue.

Insolvency of autonomous patrimonies with their own economic activity Autonomous patrimonies (patrimonios autónomos) recognized by legislation that carry out their own business activities may be subject to insolvency proceedings, in which case they shall be represented by those who administer or represent them, in accordance with the law or the contract.

A procedural guardian shall be appointed in case of conflicting interests between the insolvency estate and the person to whom its representation or administration corresponds.

Financial insufficiency (insuficiencia patrimonial). The opening of insolvency proceedings shall proceed with respect to a debtor who is in a general and non-transitory financial crisis that prevents them from punctually satisfying their monetary obligations. It shall also proceed when their financial insufficiency (insuficiencia patrimonial) is imminent.

Presumption of financial insufficiency (insuficiencia patrimonial). Unless proven otherwise, the state of financial insufficiency (insuficiencia patrimonial) of the debtor is presumed when:

1)They admit their state of financial insufficiency (insuficiencia patrimonial) and request their own insolvency proceeding.
2)They have failed to fulfill two or more matured obligations to the detriment of different creditors, without there being sufficient assets evidenced to respond for their payment.
3)Their business activity ceases, or all their legal representatives hide or are absent, without having adopted the necessary provisions to punctually fulfill their obligations.
4)They carry out acts of disposal of assets that benefit one or more creditors or third parties, with which they may compromise the punctual payment of their other obligations.
5)They resort to ruinous, fraudulent, or fictitious acts or processes to obtain economic resources or to cease fulfilling their obligations.
6)Other circumstances concur that demonstrate their financial insufficiency (insuficiencia patrimonial).

CHAPTER TWO

INSOLVENCY PROCESS

SECTION I

GENERAL PROVISIONS OF THE INSOLVENCY PROCESS

Except for the benefits that special laws grant to persons in a state of vulnerability or due to their particular conditions, in the insolvency process, the parties and third parties must act under legal representation (patrocinio letrado). The particular procedural benefits that the law grants to those persons shall be applied in the insolvency process.

Organization of the judicial file (carpeta judicial) The judicial file (carpeta judicial) shall be organized by sub-files or bundles as follows:

1)Main file (carpeta principal), which shall cover all procedural activity not corresponding to the files for verification of liabilities, administration of assets, or insolvency incidents.
2)File for verification of liabilities (carpeta de verificación del pasivo). The processing and resolution of claims asserted and legalized in respect of the insolvency proceeding shall be incorporated into this file.
3)File for administration of assets (carpeta de administración del activo). The processing and resolution of aspects related to the administration of the insolvency assets, as well as the periodic or specific reports of that management, their objections, additions, and clarifications shall be included in this file.
4)Files for insolvency incidents (carpetas de incidentes concursales), for the procedural activity that according to this law must be processed in that manner.

Notifications In insolvency processes, to attend to their notifications, the parties must indicate an email address or another means authorized by the Supreme Court of Justice for the communication of resolutions in technological case files.

The indication of a physical location, fax, post office box, or judicial notice boards for attending notifications in insolvency processes shall not be admitted.

Accumulation of insolvency processes If two or more insolvency processes are initiated separately against the same person, their accumulation shall be ordered, provided that the opening has not been declared in one of them.

They shall also be accumulated when it involves insolvency proceedings of those forming an economic interest group, which shall be processed in the case file where the first process was filed, if there is no prior declaration of opening of insolvency proceedings.

Petitions subsequent to the opening of insolvency proceedings Once the opening of an insolvency proceeding has been decreed, subsequent petitions regarding the same person shall be summarily rejected. Those pending resolution that were not previously accumulated shall be terminated. In both cases, the promoter of the petition shall not be condemned to pay legal costs (costas).

Legal costs for the dismissal of the insolvency petition When the petition to open insolvency proceedings filed by creditors is rejected, they may be condemned to pay legal costs (costas) under the same terms provided by civil procedural legislation.

Dismissal of condemnation for legal costs against the insolvent party The insolvent party (concursado) shall not be condemned to pay legal costs (costas) by virtue of the opening of insolvency proceedings or the admission of claims or proceedings against them, except for express legal provision to the contrary.

Application of civil precautionary protection to the insolvency process In addition to the effects provided by this law for the declaration of insolvency, before or during the insolvency procedure, the precautionary protection regime established by civil procedural legislation shall be applicable. However, the precautionary measures shall only lapse when they were requested prior to the filing of the insolvency lawsuit or petition and the promoter does not pursue the main process within one month after they are executed.

Own-motion action The court may order, on its own motion (de oficio), the precautionary measures and their modifications that it considers essential to ensure the purpose of the insolvency process.

For the processing of oppositions or claims formulated in an insolvency process that do not have a procedure expressly indicated by law, the incidental procedure provided in civil procedural legislation shall be followed.

In any case, proceedings that are not reasoned or that omit the contribution or proposal of admissible and useful evidence, when necessary, shall be summarily rejected.

SECTION II

PROCESSING, OPENING, OR DISMISSAL OF INSOLVENCY PROCEEDINGS

The following may request the opening of insolvency proceedings:

1)The debtor.
2)Those who exercise the administration or representation of autonomous patrimonies.
3)The creditors of the debtor or of autonomous patrimonies.
4)The public entities that legally exercise the supervision or regulation of business activities susceptible to being subjected to insolvency proceedings.

Representation of a natural person Additionally, the following may request the insolvency of a natural person:

1)Their agent, provided that this power is expressly granted to them.
2)Those who exercise their legal representation with sufficient powers to do so, in accordance with special provisions.

Representation of autonomous patrimonies When the petition is made by a legal entity that administers or represents the autonomous patrimony, it must prove its status as administrator or representative, as well as the authorization of the administration or management body for the purpose of seeking the insolvency proceeding.

In any case, contractual clauses that limit or exclude this standing shall be ineffective.

Representation of the estate In the case of a petition for insolvency of the estate for the deceased's own debts or those of the universality, it must be promoted by the executor (albacea) duly authorized for this purpose in the succession process.

Representation of legal entities In the case of legal entities, the insolvency petition must be formulated by:

1)Their representatives, expressly authorized by agreement of the partners or associates. When dealing with legal entities that do not have partners or associates, those who legally exercise the representation must be authorized by the administration and management body.
2)The liquidators of the legal entity, when it is in the liquidation phase.

Requirements for the petition by the debtor and autonomous patrimonies The insolvency petition by the debtor themselves or by the representative or administrator of the autonomous patrimony must meet the following requirements:

1)An indication of whether it involves current or imminent financial insufficiency (insuficiencia patrimonial).
2)The documents proving the representation of the petitioner, when necessary.
3)A clear, detailed, and precise explanation, in chronological order, of the reasons that caused the financial insufficiency (insuficiencia patrimonial) or that make it imminent.
4)A summary of the economic and legal activity carried out over the last three years. It shall indicate whether economic activity will continue after the petition and, where applicable, shall set out a detail of it.
5)An inventory of tangible and intangible assets of which they are the owner or that form part of the autonomous patrimony, as of the date of the insolvency petition, with an estimate of their value, the place where they are located, and, where applicable, the registration identification data. The encumbrances (gravámenes) and annotations of any nature burdening the assets, their characteristics, as well as any dispute or judicial or extrajudicial execution affecting or that may affect them, must be indicated in detail, with the indication of the case file or cause number, the status of the respective processes, and executions that are in progress.
6)A list of their debtors in alphabetical order, indicating their full name, identifying information (calidades), and domicile. It shall include the amount of principal, interest, commissions, expenses, fines, and other amounts owed. Regarding interest, its type and interest rate must be specified. It shall inform the maturity date of each credit, as well as the existence of co-debtors, personal, security interests (garantías reales), or guarantees of any other nature.
7)Detailed information on the trusts (fideicomisos) in which they appear as trustor (fideicomitente), trustee (fiduciario), or beneficiary (fideicomisario), with a detailed indication of the trust assets (bienes fideicometidos). It shall provide the incorporation contracts and their modifications. It shall inform on the current status of each trust, its assets, in addition to the rights and obligations of those participating in it. If it concerns the insolvency of an autonomous patrimony, the indicated information shall expressly refer to its assets and the business activity carried out.
8)A list of assets that are not their property and are in their possession, indicating the causes or legal acts by virtue of which they possess them, as well as the use given to them. It shall add the estimate of their value and the period for which they would legally have to keep them under their possession.
9)A list of their workers, in alphabetical order, if any, indicating their full name, identifying information (calidades) and domicile. It shall include their job positions, gross and net salaries, as well as an indication of whether they are up to date in the payment of what corresponds to them. If they are in default in the payment of labor credits (acreencias laborales), it shall individualize, by type of benefit, the periods and amounts owed. If any worker had judicially or extrajudicially claimed payment, the type of claim, the court or persons in charge of the execution, the process or case file number, and its current status shall be indicated.
10)A list of the other creditors, in alphabetical order, indicating their full name, identifying information (calidades) and domicile. It shall include the amount of principal, interest, commissions, expenses, fines, and other amounts owed. Regarding interest, its type and rate must be specified. It shall inform the maturity date of each credit, as well as the existence of co-debtors, personal guarantees, security interests (garantías reales), or guarantees of any other nature. If any creditor had judicially or extrajudicially claimed payment, the type of claim, the court or persons in charge of the execution, the process or case file number, and its current status shall be indicated.
11)Detailed information on any other judicial and extrajudicial processes of a patrimonial nature in which they are a party, indicating their number, the parties involved, and the authority or persons processing it; as well as their purpose and current status.
12)The expenses they periodically incur, and, if they carry out business activities, their operating costs for the last twelve months.
13)Enumeration of contracts in the course of execution. It shall indicate the contracting parties, the assumed obligations, the terms or conditions, guarantees, and the current status of their compliance.
14)If the debtor was obliged to keep accounting records, it shall accompany the financial and accounting statements corresponding to the last three years. The accounting statements must be accompanied by a certification issued by a certified public accountant. If the debtor had contracted an external audit of their accounting statements, it shall accompany the reports corresponding to the indicated period. The legal and accounting books shall be provided only when required by the court, if it considers it necessary. However, they may be consulted without restriction by those exercising administration, control, or oversight within the insolvency process. The debtor or their representatives shall be responsible for the custody of the mentioned books and for the continuation of the accounting, as long as the judicial authority does not order otherwise.
15)If they have a legal duty to pay taxes, they must prove compliance with tax declarations and obligations for the last three years.
16)If it involves a legal entity, it shall provide details of partners, associates or members, representatives, administration, management, and oversight bodies.
17)Any other documentation or information deemed necessary.
18)The proposal or proposals for the solution of the financial crisis, which may consist of a proposal for a composition agreement (convenio) or liquidation.

In the event of being unable to meet any of the above requirements, they shall explain the reasons to the court and provide the necessary evidence. The requirement shall be dispensed with if the reasons given are acceptable in the court's judgment.

When the rescue of a company or of the debtor's financial crisis is sought, the insolvent party (concursado) may formulate general or differentiated agreement proposals, provided it favors the purposes of the insolvency proceeding. When making differentiated proposals, they must justify, with objective criteria, the groupings and categories of creditors for which they are formulated. When the court considers that the categories are not duly justified, it shall apply the provisions for a defective insolvency petition, specifying the reasons why they are not admissible, and shall order its correction.

Any proposal for an agreement must contain equal clauses for creditors within each differentiated category.

The proposals may consist of a partial forgiveness of debts, granting longer terms for fulfillment, a business restructuring plan, refinancing or readjustment of debts, delivery of assets, capitalization of assets, increases in capital stock, liquidation of assets, or any other type of lawful solution not contemplated in the above or resulting from their combination.

When formulating several proposals, they must specify which are principal and which are subsidiary, with their respective order of proposition. If omitted, the first shall be understood as principal and the others subsidiary in the order they were enunciated.

When a proposal includes commitments from third parties or creditors, it must also be signed by them or their representatives, with the express indication that it is not subject to conditions.

Alternative or additional propositions may be included for categories or classes of creditors.

When the validity of the proposal depends by law on the agreement of a corporate body or of legal entities, the respective agreement must be attached.

Initial notice to creditors Once the petition is filed, the promoter shall be obliged to notify all creditors about the proceeding undertaken and shall tell them before which court it is being processed, by any means that reliably proves its dispatch by the means previously agreed upon by the parties. If a specific means of notification has not been agreed, it shall proceed in accordance with the provisions of Law 8687, Law on Judicial Notifications (Ley de Notificaciones Judiciales), of December 4, 2008.

Within five business days following the date of filing the petition, they shall prove to the court compliance with the above. The insolvency proceeding may only be declared open if they verify effective communication to all creditors or the existence of qualified reasons that prevent them from doing so. If they do not comply with the communication within the indicated period, the insolvency proceeding shall be declared inadmissible.

Once the communication of the filing of the insolvency process is received, the creditor may not initiate judicial or extrajudicial executions against the debtor or the autonomous patrimony, unless they are expressly authorized by a legal norm to exercise their credit rights outside the insolvency proceeding, or it is declared inadmissible.

Defective petition If the petition does not meet the legal requirements, the court shall specify all the defects at once and order their correction within a period of five days. If the prevention is not complied with, the inadmissibility of the petition shall be declared.

However, a second prevention may be made only once in exceptional cases, when the intention to correct the indicated defects within the granted period was evident.

Evidence on its own motion (prueba de oficio) Prior to the decision on the declaration of opening of the insolvency proceeding, the court may order any evidence it deems necessary.

Impossibility of withdrawal The debtor who requests the opening of their insolvency proceeding may not withdraw it. However, before the declaration of opening, the applicant may provide evidence to prove that their economic situation has subsequently changed in such a way that the objective presupposition for opening insolvency proceedings no longer subsists.

Proof of creditor status A creditor who presents a legally valid document of any nature in which a monetary obligation payable by the defendant is stated may petition for insolvency, without it necessarily being matured.

The document must be an original, a certified copy when admitted by law for its judicial collection, or contained in a medium in which it appears unquestionable who the debtor is and their signature or that of their legitimate representatives. If an executory document (título ejecutivo) is presented, the signature of the debtor or their legal representative shall be essential only when required by law.

When the original physical document is presented, a note shall be inserted on it stating that it was presented to the insolvency process, with the exact date and time, and a faithful copy shall be incorporated into the file. The original shall be returned to the petitioner, who must custody it properly and shall be obliged to present it if the court so requires. Failure to do so before the declaration of insolvency may, depending on the circumstances, result in the inadmissibility of the process being decreed. After the declaration of the opening of insolvency proceedings, for justified reasons the court may require the presentation of the original document. If the creditor requesting the insolvency proceeding does not provide it within the period granted for this purpose, their claim may be considered rejected when it has been timely objected to.

A creditor favored by a final judgment, award, or judicially approved agreement, containing enforceable monetary obligations, may only petition for the declaration of insolvency under the same conditions established for other creditors when they demonstrate the concurrence of any of the facts that give rise to the presumption of financial insufficiency (insuficiencia patrimonial).

Creditors with pledge, mortgage, chattel mortgage, security interests (garantías reales), or comparable guarantees may only request the opening of insolvency proceedings if they waive their privilege or when the assets liable for the obligation have been insufficient to satisfy the entire credit, including the duly proven impairment of the guarantees.

Standing of public supervisory or regulatory entities When the petition is made by a public entity legally responsible for the supervision or regulation of business activities susceptible to insolvency, the final agreement by which the decision was made to request the opening of insolvency proceedings must be presented.

Lawsuit (demanda) In addition to the general requirements established by civil procedural legislation, the lawsuit for the declaration of insolvency must indicate:

1)The cause that gives rise to the presumption of the state of financial insufficiency (insuficiencia patrimonial).
2)If it involves current or imminent insufficiency, the statement of the reasons justifying the opening of the insolvency proceeding.
3)The solution deemed appropriate to resolve the financial insufficiency (insuficiencia patrimonial).

It shall not be necessary to estimate the amount of the lawsuit.

It may request the adoption of precautionary measures deemed suitable to protect its interests or those of the insolvency proceeding.

Defective lawsuit If the lawsuit does not meet the legal requirements, the court shall specify all defects at once and order their correction within a period of five days. If the prevention is not complied with, its inadmissibility shall be declared. However, a second prevention may be made only once in exceptional cases, when the intention to correct the indicated defects within the granted period was evident.

Unadmittable lawsuit (demanda improponible) In addition to the cases established by civil procedural legislation, by means of an early judgment, insolvency lawsuits shall be declared unadmittable when any of the following circumstances are evident:

1)The lack of insolvency standing (legitimación concursal) of the plaintiff in accordance with the provisions of this law.
2)That the objective or subjective insolvency presuppositions are not configured.
3)That the debtor or the autonomous patrimony sought to be subjected to insolvency proceedings lacks a plurality of creditors.

Summons (emplazamiento) and precautionary measures If the lawsuit is admissible, it shall be processed and the defendant shall be granted a period of ten days to respond.

Even on its own motion (de oficio), the court shall adopt the necessary precautionary measures to protect the rights of potential creditors, the preservation of the debtor's assets, and any other typical or atypical measure that ensures the purposes of the insolvency proceeding.

Acquiescence (allanamiento) and lack of response If the defendant expressly accepts the state of financial insufficiency (insuficiencia patrimonial) and acquiesces to the claim (allanamiento), or if they do not respond within the granted period, if applicable, the court shall issue a judgment declaring the insolvency proceeding open.

In case of acquiescence (allanamiento), within the following ten days counted from the date on which the response was filed, the defendant must comply with the requirements established in this law for the debtor's own insolvency petition or that of the autonomous patrimony.

Unjustified failure to submit the requirements within the time limit or the lack of timely response to the complaint shall not prevent the continuation of the insolvency proceeding. The necessary measures shall be adopted to obtain the information and documentation deemed indispensable. A decision shall be made regarding the solution to the patrimonial crisis deemed appropriate, based on the evidentiary elements that can be gathered.

Negative Response If the defendant responds negatively within the summons period and evidence has been offered, the court shall admit only that which leads to clarifying the subject matter of the dispute. Likewise, it may order, on its own motion, that which it deems strictly necessary.

When evidence must be taken, it shall adopt the measures it considers pertinent and shall summon the parties to a single oral hearing for that purpose, within a time limit not exceeding ten days. At this hearing, all procedural defenses that have been raised shall be processed and resolved. The formulation of defenses that may affect jurisdiction shall not suspend the course of the proceeding nor prevent the holding of the oral hearing, but must be resolved at the outset. If the procedural defenses are declared inadmissible, the other activities proper to the hearing shall continue, except for the setting of the amount in controversy, as this is an inestimable proceeding.

If there is no evidence to be taken at the hearing, a three-day period shall be granted to the plaintiff to address the negative response and the defenses raised; once that period has expired, the court shall decide in a single resolution, first the defenses that may affect jurisdiction, then the other procedural defenses, and finally, if the foregoing are inadmissible, matters concerning the opening or rejection of the insolvency proceeding.

Prejudiciality The existence of a criminal proceeding shall in no case give rise to prejudiciality with respect to the request for opening the insolvency proceeding. The falsity of the instrument serving as the basis for the complaint, as well as any other defense regarding the validity of the obligation or the prerequisites for opening the insolvency proceeding, may be invoked as substantive defenses within the summons period and shall be resolved in the judgment.

When, in order to decide on the opening of the insolvency proceeding, it is necessary to decide any question that constitutes the subject matter of another non-criminal proceeding prior to the initial request, the suspension of the course of the insolvency proceeding may be decreed, on its own motion or at the request of a party, until that other matter is decided with finality. The insolvency proceeding shall be suspended prior to the holding of the oral hearing, when such hearing is necessary. If it is not necessary, the suspension shall only prevent the issuance of the judgment.

In no case shall prejudiciality prevent the consideration of the constitution, modification, or extinction of precautionary measures (medidas cautelares) in the insolvency proceeding.

Withdrawal Whoever has filed a complaint for the opening of the insolvency proceeding of another person, succession, or autonomous patrimony, may not withdraw the complaint. However, if before the declaration of opening, evidence is provided that determines the lack of grounds for the proceeding in relation to the objective prerequisites, the proceeding may be terminated without further procedure.

Prohibition of Thwarting the Insolvency Request by Payment The defendant may not thwart the insolvency complaint by paying what is owed with respect to the credits that served as its basis.

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Time Limit for Issuing the Judgment Once the oral hearing has concluded or the proceeding is ready for a decision on the merits when no hearing was held, the judgment shall be issued in writing within a time limit of five days. In very complex proceedings, the time limit shall be fifteen days, which shall be justified in the judgment issued.

Dismissal Judgment If the opening of the insolvency proceeding is denied, the court may order the plaintiff to pay costs, which shall be liquidated in the same proceeding.

The plaintiff may also be ordered to pay damages that were caused by their action, which shall be liquidable before the competent ordinary court.

Granting Judgment In addition to the content proper to a judgment, the resolution declaring the opening of the insolvency proceeding shall contain:

1)The opening of the insolvency proceeding.
2)The appointment of an insolvency intervener (interventor concursal) or insolvency administrator (administrador concursal) and an alternate, as appropriate, as well as the delimitation of their functions, when it is necessary to provide for specific powers different from or additional to those established in this law.
3)The call to creditors and interested parties to appear to exercise their rights, within a time limit of fifteen days counted from the publication of the operative part of the judgment, which must be published once, in one of the three daily national circulation media outlets that the court shall indicate to the promoter of the proceeding.
4)The order to communicate the opening of the insolvency proceeding to the respective public registries and to public, financial, stock market, and other entities of any nature with which the insolvent debtor (concursado) may have a relationship.
5)The order to the insolvent debtor or their legal representative, if not previously done, to comply with the requirements established in this law for the insolvency request by the debtor themselves or the autonomous patrimony, within a time limit of ten days from the notification of the judgment.
6)Any other precautionary measure that the court deems necessary to guarantee the rights and interests of the parties in the object and in the outcome of the proceeding. Said measures shall be immediately enforceable, even if this resolution is challenged.

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SECTION III

EFFECTS OF THE OPENING OF THE INSOLVENCY PROCEEDING

Unless otherwise expressly provided by law, the effects of the opening of the insolvency proceeding shall take effect immediately upon the issuance of the resolution ordering it, even if it is challenged.

They may be subsequently modified, in accordance with the provisions of this law.

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Activity of the Insolvent Debtor The opening of the insolvency proceeding, unless otherwise ordered, shall not interrupt the professional, business, or economic activity carried out by the insolvent debtor.

Administration of Assets by the Insolvent Debtor Unless otherwise ordered, the insolvent debtor shall retain the powers of administration and disposition of their assets subject to the insolvency proceeding, subject to the authorization or consent of the insolvency intervener, when dealing with acts that exceed the ordinary course of the business, economic, or professional activity of the insolvent debtor. However, the consent of the intervener shall be required if real property is intended to be alienated, when such property is part of the ordinary course of the economic or business activity.

If the insolvent debtor does not carry out economic activities, they must require the consent of the intervener to carry out acts of disposition of the assets subject to the insolvency proceeding.

Judicial authorization shall be required when:

1)It is intended to dispose of, in any manner, real property outside the normal course of the company or economic activity of the insolvent debtor.
2)It is intended to alienate assets of any nature that are indispensable for the business or economic activity of the insolvent debtor.
3)There is no agreement between the insolvent debtor and the intervener regarding the carrying out of any other legal act that could jeopardize the purposes of the insolvency proceeding.
4)It is intended to terminate a contract in the course of performance, in the permitted cases and the forms provided for in this law.

Before deciding whether to authorize the insolvent debtor or not, the incidental procedure shall be followed within the asset administration file.

Management of Assets by the Insolvency Administrator Without prejudice to the precautionary measures that have been adopted, upon declaring the opening of the insolvency proceeding or during the proceeding, it may be ordered that the administration of the assets be exercised totally or partially by an insolvency administrator, when:

1)The insolvent debtor has not appeared in the proceeding; has unjustifiably opposed the insolvency proceeding; does not cooperate with the duties of information or documentation requested in a timely manner or acts within the proceeding with procedural abuse, bad faith, or against the insolvency purposes.
2)The proposed solution to the patrimonial insufficiency presented by the insolvent debtor consists of the total delivery of their assets or the greater part of their patrimony. In any case, if they offer to deliver a part of their assets that does not encompass the majority of their holdings, the court shall adopt the precautionary measures it deems convenient for their custody and conservation.
3)The greater part of the insolvency estate assets (bienes concursales) are productive and the insolvent debtor has ostensibly ceased their business activity.
4)There are sufficient elements evidencing inadequate management of the patrimony by the insolvent debtor.
5)Other well-founded reasons justifying the measure are evident.

The court must expressly indicate the asset management powers that shall correspond to the insolvency administrator, when a partial or differentiated administration must be ordered at the court's discretion.

The insolvency administrator must request authorization, via the incidental route, in the cases expressly provided for by law, and to carry out acts of disposition of the insolvency estate patrimony that exceed the powers granted by the court.

The total or partial separation of the insolvent debtor or their representatives from the administration of their assets may be ordered on its own motion, at the request of the intervener, the administrator, or the creditors, as a prior precautionary measure, in the resolution decreeing the opening of the insolvency proceeding or during its processing. When requested after the opening of the insolvency proceeding, it shall be processed via the incidental route.

This route shall also be followed when variations in the insolvency administration powers are intended.

Representation of the Insolvent Debtor The insolvent debtor and their representatives shall retain the powers of capacity and representation to act and manage within the insolvency proceeding, with the limitations established by law.

Outside the proceeding, they shall also retain their powers of capacity and representation, except when they have been separated from the administration of the insolvency estate assets.

However, when assets of the insolvency estate could be jeopardized, they shall require express authorization from the intervener to file judicial and extrajudicial actions; to withdraw from them or from appeals; to acquiesce to claims; to omit opposition to a judicial or extrajudicial complaint or action, or to transact, conciliate, or submit a patrimonial dispute to arbitration. If the intervener denies authorization, the insolvent debtor may request it through an insolvency incident. When the total or partial separation of the insolvent debtor from the administration of their assets is ordered, as well as with respect to variations in the insolvency administration powers, the court shall order, even on its own motion, what corresponds regarding the representation of the insolvency estate.

Avoidability of Acts of Administration and Disposition Acts of administration and disposition of assets detrimental to the insolvency proceeding, carried out after its opening, shall be avoidable via the incidental route, when they are performed:

1)Without the authorization of the court in cases where this is required.
2)By the insolvent debtor or their legal representatives, without the consent of the intervener, when this is necessary.
3)By the insolvent debtor or their legal representatives, when they have been totally or partially separated from the administration and disposition of the insolvency estate assets, after the respective registration in the corresponding public registries.

Bodies of Legal Entities Subject to Insolvency During the processing of the insolvency proceeding, the bodies of the legal entity subject to insolvency shall be maintained, without prejudice to the effects that the intervention or the suspension of its powers of administration and disposition produce on its functioning.

The insolvency administrator or intervener shall attend and participate in the sessions of the collegiate bodies of the legal entity subject to insolvency. For these purposes, they must be summoned in the same manner and with the same notice as the members of the body that is to meet.

If compliance with the indicated summons does not occur, the collegiate body may not meet even if all its members are present, and the agreements they adopt shall be avoidable at the request of the insolvency administrator, intervener, or liquidator (liquidador concursal), as appropriate, provided they seek it via the incidental route in the insolvency proceeding, within the expiration period of three months counted from the moment the agreement or agreements adopted become known to them.

The collegiate bodies of legal entities subject to insolvency may not agree to the distribution of dividends, surpluses, bonuses, or any other benefit in favor of their partners or associates, unless enabled by an insolvency agreement adopted and judicially approved, or it is legally possible upon the conclusion of the liquidation of the insolvent patrimony.

Right to Maintenance When the non-attachable assets and income of the individual insolvent debtor are insufficient for their maintenance and that of their dependent family unit, after the opening of the insolvency proceeding, they shall have the right to receive maintenance (alimentos) chargeable to the insolvency estate (masa), provided there are income or assets for this purpose.

The right to receive maintenance shall not apply when the family unit has income for its maintenance or if the insolvent debtor receives sufficient financial support from their relatives or third parties. Nor shall they have a right to maintenance chargeable to the insolvency estate when they can receive it from other persons legally obligated to provide it.

The insolvent debtor's petition shall be processed via the incidental route, with the participation of the insolvency administrator, intervener, or liquidator, as appropriate.

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Prior Judicial or Arbitral Proceedings Not for Collection Judicial proceedings for declaratory relief or arbitral proceedings, not for collection, commenced before the declaration of the insolvency proceeding, shall continue before the courts hearing them until their conclusion with finality.

Maintenance and labor proceedings filed against the insolvent debtor, which are in the trial phase, shall continue until a final judgment occurs. However, the initiation or continuation of a labor trial proceeding shall be unnecessary when the person exercising the insolvency intervention or administration directly recognizes workers' credits, under their responsibility, if they consider them to be duly accredited, in which case they shall proceed to their immediate payment.

Executions of judgments or awards that do not consist of the payment of liquid sums shall not be suspended. However, if in the course of the execution a monetary judgment against the insolvent debtor arises, its collection must be made within the insolvency proceeding, without prejudice to being able to continue with the execution of non-monetary matters or against other convicted persons other than the insolvent debtor.

Prior Collection Proceedings and Monetary Executions Judicial and extrajudicial collection proceedings and monetary executions filed prior to the declaration of the insolvency proceeding shall be suspended, only insofar as they seek the pursuit of assets of the insolvent debtor. The proceeding shall continue against other defendants and their assets.

Monetary executions shall not be suspended with respect to assets of the insolvent debtor, when:

1)At the time of filing the insolvency request or complaint, there was a date set for auction already duly notified to the insolvent debtor or their legal representative.
2)The sale or liquidation of assets has been ordered by mechanisms other than auction, duly communicated to the insolvent debtor or their legal representative, before the filing of the insolvency request or complaint.
3)It concerns labor or maintenance credits, if an attachment (embargo) has been decreed or executed in the execution. However, in the execution, other assets of the insolvency estate may not be pursued. In any case, whether having an attachment in their favor or not, the creditor may always request directly from whoever is administering the insolvency estate assets (activo concursal) that, as soon as possible, they pay what corresponds. If not done, they shall communicate it to the court, which shall adopt immediate legal measures for the fulfillment of the obligations. Maintenance and labor creditors with an enforceable resolution in their favor, who have not initiated their execution, may also directly request payment from the insolvency proceeding in the terms indicated above. In any case, if there is an insufficiency of assets for their cancellation, the rules established by law on credit priority (prelación de créditos) and on proportional distributions of payments among creditors of the same class shall be observed.

Precautionary Measures Decreed in Other Proceedings Unless otherwise ordered, precautionary measures ordered prior to the opening of the insolvency proceeding, in any type of proceeding, shall retain their effectiveness.

If there is a contradiction, the precautionary measures adopted within the insolvency proceeding shall prevail over those ordered in other proceedings.

Attachments decreed and executed prior to the declaration of the insolvency proceeding shall be conserved in favor of the general body of creditors (masa de acreedores), in accordance with the principle of equality and without prejudice to preferences in the classes of credits, except in cases of judicial proceedings that are not suspended.

After the declaration, new attachments may only be decreed and executed in labor or maintenance proceedings.

If a precautionary measure of administration or intervention of productive assets has been adopted in another proceeding, the insolvency court may at any time set it aside, modify it, or maintain it, when regulating the administration or intervention regime in the insolvency proceeding, as suits the purposes of the proceeding.

Likewise, the insolvency court may set aside or modify any precautionary measures ordered in other proceedings, when it is indispensable for achieving the insolvency purposes.

Proceedings and Executions After the Opening of the Insolvency Proceeding The opening of the insolvency proceeding shall not prevent the bringing of new judicial or arbitral proceedings in favor of or against the interests of the insolvency estate, before the corresponding ordinary judicial or arbitral court, except when it concerns:

1)Claims that, in accordance with this law, must be processed before the insolvency court.
2)Collection proceedings or judicial or extrajudicial executions of monetary obligations against the insolvency estate; in which case, creditors must be subject to the provisions of this law.

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Conversion of Monetary Credits to National Currency and Inadmissibility of Adjustments For the purposes of their recognition and payment, credits expressed in foreign currency shall be converted to national currency, according to the official selling exchange rate applicable at the time of the opening of the insolvency proceeding, without prejudice to those credits that have been agreed upon and are governed under foreign law, which may be legalized in the agreed currency before a court, in the event of an insolvency proceeding.

Legal, conventional, or judicial adjustments of monetary obligations due to indexation or any other economic criteria shall not apply during the development of the insolvency proceeding.

These provisions shall not be applicable to credits for which this law permits their collection outside the insolvency proceeding.

Suspension of Interest Accrual From the day of the declaration of the insolvency proceeding, the accrual of legal or conventional interest on monetary credits subject to the insolvency proceeding shall be suspended, except for those relating to credits with special privilege (privilegio especial), which may be liquidated up to the extent of the respective guarantee.

Suspension of the Right of Retention Once the insolvency proceeding is declared, the material exercise of the right of retention over insolvency estate assets by creditors subject to the proceeding shall be suspended, without prejudice to the privilege that may correspond to them for their payment. However, when the insolvent debtor continues with the administration of their assets, at the request of the creditor, the court may authorize them to maintain the retention, provided the purposes of the insolvency proceeding are not harmed.

Once the insolvency proceeding is concluded with finality, if those assets have not been alienated and the credit that gave rise to the retention still subsists, they must be immediately returned to the holder of the right of retention.

Set-off of Credits and Obligations The legal compensation of credits and obligations of the insolvent debtor shall only be valid and effective when the legal prerequisites have been verified before the declaration of the opening of the insolvency proceeding, even if on that date no judicial resolution or administrative act declaring the compensation has been issued.

In no case shall voluntary or conventional compensation be effective once the opening of the insolvency proceeding is declared, without prejudice to what is established in the following paragraph.

In the case of operations with derivative financial instruments entered into between the same parties, on one or more occasions, under the same master contracting agreement regulated by national or foreign law, which are carried out or traded in the over-the-counter market, early termination, voluntary or conventional compensation, and liquidation shall operate, even once the opening of the insolvency proceeding is declared. The foregoing shall be possible in accordance with what is provided for in the respective contracts, including in such a way that only the amount corresponding to the net balance of the reciprocal obligations agreed upon under each master agreement may remain in force, even when the debts or credits are not liquid and payable on the date of the declaration of the insolvency proceeding. In such cases, the margins and guarantees granted may be executed for the net amount owed, and such agreements shall be enforceable against insolvency, intervention, or resolution proceedings, as appropriate, without prejudice to the rights of the resulting creditor with respect to any unpaid balance.

Suspension and Interruption of Statute of Limitations and Expiration While the creditors are unable to exercise their credit right against the insolvency estate, any statute of limitations or expiration period shall be suspended.

Statute of limitations periods shall be interrupted during the processing of the opened insolvency proceeding, with respect to creditors who have appeared to assert their rights therein.

The suspension and interruption of the statute of limitations shall not extend to co-debtors, joint and several debtors, guarantors, sureties, and other obligors.

Unenforceability of Fines and Penalty Clauses Once the insolvency proceeding is declared, penalty clauses of a public or private nature, as well as administrative or tax fines of any nature, shall be unenforceable.

Coercive Measures Against the Insolvency Estate Linked to Economic, Professional, or Business Activities To continue economic, professional, or business activities after the opening of the insolvency proceeding, the insolvent debtor must perform the obligations that by law must be fulfilled with state or public entities of any nature.

However, the mere default prior to the declaration of the insolvency proceeding shall not enable public law creditors to exercise coercive administrative measures or acts that impede the continuity of the economic activities of the insolvent debtor.

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Continuity of Pending Performance Contracts The declaration of the insolvency proceeding shall not affect the effectiveness of contracts between the insolvent debtor and third parties with obligations pending performance, unless expressly provided otherwise by law.

In the case of contracts that only obligate the non-insolvent contracting party or the pending performance of which only corresponds to that party, the contract shall subsist and must be performed in the agreed manner.

Termination of Contracts Pending Performance at the Declaration of the Insolvency Proceeding When, upon declaring the opening of the insolvency proceeding, contractual obligations by the insolvent debtor are pending performance, the following provisions shall be observed:

1)The insolvent debtor, with the authorization of the intervener, or the insolvency administrator, as appropriate, within the time limit granted for the exercise of creditors' rights in the insolvency proceeding, when it favors the purposes of the proceeding, may request judicial authorization to terminate the contract. Before making the request, they must communicate it to the other contracting party by any means that reliably demonstrates its effective receipt. The communication must indicate the court processing the insolvency proceeding and the judicial case number. Non-compliance with the provisions of this subsection shall result in the flat rejection of the petition.
2)Within the time limit granted for the exercise of rights within the insolvency proceeding, the other contracting party may require the insolvent debtor and the intervener, or the insolvency administrator, as appropriate, to expressly state whether they will exercise the power of termination of the contract, by any means that reliably demonstrates its effective receipt. Once the communication is received, they may only exercise the power of termination within a period of five days, except as provided for in cases of approval of insolvency agreements or insolvency liquidations.
3)If the power of termination is not exercised within the aforementioned time limits, within the following five days, the other contracting party may request the court to declare the contract terminated or to adequately guarantee its performance, if there is a manifest and serious risk to their rights and interests in the face of potential non-performance by the insolvency estate. Even if termination is sought, the contract may be maintained in force if sufficient guarantee is provided to protect the petitioner's rights. The requests and authorizations contemplated shall be processed via the incidental route.

In the event that termination of the contract is decreed, if requested, it shall be for the court to decide on the indemnities and restitutions that may be applicable.

When dealing with contracts established for carrying out the professional, business, or economic activity of the insolvent debtor and this activity continues totally or partially after the opening of the insolvency proceeding, the indemnities set shall be considered as ordinary insolvency credits (crédito concursal común).

Ineffectiveness of Contractual Clauses Unless otherwise provided by law, contractual clauses that establish the termination of the contract or the power to terminate it, solely due to the declaration of the insolvency proceeding of any of the contracting parties, shall be ineffective.

Also, those clauses that make the obligations of one of the contracting parties more onerous in the event of the opening of the insolvency proceeding shall be ineffective, unless otherwise provided by law.

Forced Execution or Contractual Termination Due to Non-Performance The declaration of the opening of the insolvency proceeding shall not affect the power of the contracting parties to request forced execution, termination of the contract, or damages derived from the prior or supervening non-performance of the counterparty.

When actions for forced execution or contractual termination are intended to be exercised against the insolvency estate, they shall be processed before the insolvency court, via the incidental route.

Even if there is non-performance by the insolvent debtor, in consideration of the interest of the insolvency proceeding, the court may order the continuation of the contract or its termination.

When termination of the contract was sought and the judgment orders its continuation, the obligations owed to the other contracting party shall be considered chargeable to the insolvency estate (masa).

If termination of the contract is ordered, all obligations not yet due shall be extinguished. Obligations due because of non-performance by the insolvent debtor prior to the declaration of the insolvency proceeding shall be included therein as credits in favor of the non-defaulting party, as ordinary insolvency credits. If the non-performance occurs after the declaration of the insolvency proceeding, the credits arising therefrom shall be satisfied chargeable to the insolvency estate.

Reversal of the Acceleration of Obligations of the Insolvent Debtor When a loan or financing contract has matured early due to the non-payment of principal installments or accrued interest occurring within the three months prior to the request for opening of the insolvency proceeding, the insolvent debtor, with the consent of the intervener, or the insolvency administration, as appropriate, may set aside the acceleration, before the expiration of the time limit for the exercise of rights within the insolvency proceeding.

To do this, they must communicate it to the other contracting party by any means that reliably demonstrates its effective receipt. The communication must indicate the court processing the insolvency proceeding and the judicial case number.

Furthermore, the promoter must deposit with the insolvency court the sums owed at that time. They shall continue paying the creditor the installments or successive tract payments, as provided in the contract, chargeable to the insolvency estate.

Within the five days following receipt of the communication, the creditor may object on the grounds of having established, prior to the insolvency declaration (declaratoria de concurso), judicial or extrajudicial actions aimed at collecting the total amount owed or when the creditor considers the sums deposited in their favor to be insufficient. Their objection shall be processed via the incidental proceeding (vía incidental).

Stay of evictions for nonpayment When deemed necessary for the purposes of the insolvency proceeding (concurso) and provided that the eviction has not yet been carried out, the insolvent debtor (concursado) with the approval of the intervenor (interventor), or the insolvency administrator (administrador concursal), as applicable, may, before the expiration of the deadline for exercising rights within the insolvency proceeding, stay a judicial process aimed at eviction for nonpayment, established before the insolvency declaration (declaratoria de concurso), if the sums owed for rent and other items that by law or contract correspond, as well as the costs caused to the landlord by that judicial claim, are deposited before the common court hearing said process.

Labor contracts Once the insolvency proceeding (concurso) of an employer is declared, the provisions of labor legislation shall apply to workers and to those who cease to be workers during its processing, without prejudice to what this law provides regarding the classification of claims (créditos) and their payment.

Automatic payment clauses for claims Unless otherwise provided in the insolvency proceeding (concurso), contractual clauses for automatic payments of claims (créditos) via checking accounts, savings accounts, salary deductions, or other similar means shall be rendered ineffective. The outstanding balances at that time must be collected in accordance with the regulation of the insolvency process (proceso concursal).

Performance of obligations in favor of the insolvency proceeding From the publication of the insolvency proceeding (concurso) or from when they become aware of its opening prior to such publication, third parties who must make payments or perform obligations of any nature to the insolvent debtor (concursado) shall do so to the person responsible for the administration of the assets of the insolvency proceeding. Those performed in contravention of the provisions of this rule shall be ineffective, only if they harm the interests of the insolvency proceeding (intereses concursales).

Assets in the possession of third parties From the publication of the insolvency proceeding (concurso) or from when they become aware of its opening prior to such publication, third parties who have assets of the insolvency proceeding in their possession must inform the party holding the insolvency administration (administración concursal) within the next five days, by any means that reliably proves its actual receipt. Failure to do so will make them liable for the damages that they may cause to the insolvency proceeding.

Third-party guarantors and co-debtors of the insolvent debtor's obligations The insolvency declaration (declaratoria de concurso), in and of itself, shall not extinguish the real and personal guarantees granted by third parties in favor of the insolvent debtor (concursado). The same rule shall apply to co-debtors or co-obligors.

Persons especially related to the insolvent debtor as an individual The following shall be considered persons especially related to the insolvent debtor (concursado) as an individual and subject to the special provisions concerning them in this law:

1)The spouse of the insolvent debtor or whoever was the spouse within the two years prior to the insolvency petition (solicitud de concurso).
2)Persons who habitually cohabit or have cohabited with the insolvent debtor, within the two years prior to the insolvency petition.
3)The ascendants, descendants, and siblings of the insolvent debtor or of their spouse or cohabitant who cohabit with them or have cohabited within the two years prior to the insolvency petition.
4)The spouses or cohabitants of the ascendants, descendants, and siblings of the insolvent debtor.
5)The other relatives of the insolvent debtor by consanguinity or affinity, up to the third degree.
6)Legal entities controlled by the insolvent debtor or by the persons mentioned in subsections 1, 2, 3, and 4, as well as the other persons that make up the same economic interest group.
7)The de facto or de jure administrators of the legal entities controlled by the insolvent debtor or by the persons mentioned in subsections 1, 2, 3, and 4.
8)Legal entities administered de facto or de jure by any of the persons indicated in subsections 1, 2, 3, and 4.

Persons especially related to the insolvent debtor as a legal entity The following shall be considered persons especially related to the insolvent debtor (concursado) as a legal entity and equally subject to the special provisions concerning them in this law:

1)The partners or associates who, according to the law, are unlimitedly liable for the obligations of the insolvent legal entity and those others who are holders of at least twenty percent (20%) of its capital.
2)When the partners or associates especially related according to the preceding subsection are individuals, their ascendants, descendants, siblings, and their spouse or whoever was their spouse within the two years prior to the insolvency petition, or the persons who habitually cohabit or have cohabited with them within the indicated period, shall also be considered persons especially related to the insolvent entity.
3)The de jure or de facto administrators, their legal representatives, and the liquidators of the insolvent legal entity, as well as those who held such positions within the two years prior to the insolvency petition.
4)Those who make up the same economic interest group with the person declared in insolvency (concurso).

Persons especially related to the insolvent autonomous patrimony The following shall be considered persons especially related to the insolvent autonomous patrimony (patrimonio autónomo concursado) and shall be subject to the special provisions concerning them in this law:

1)Its legal representatives, de facto or de jure administrators, and those who held such positions within the two years prior to the insolvency petition (solicitud de concurso).
2)The individuals or legal entities that are beneficiaries of said patrimonies.
3)The individuals or legal entities especially related to the subjects indicated in the two preceding subsections, in accordance with the scenarios of the articles

Annulment and ineffectiveness actions provided for by common legislation The actions for annulment (nulidad) and ineffectiveness (ineficacia) of acts and contracts, provided for by common legislation in favor of creditors, may also be exercised by whoever holds the representation or administration of the insolvency proceeding (concurso). When the insolvent debtor (concursado) continues with the representation, it shall require the consent of the intervenor (interventor).

Automatic non-opposability of gratuitous acts Acts performed by the insolvent debtor (concursado) gratuitously, within the two years prior to the opening petition (solicitud de apertura), shall be non-opposable to the insolvency proceeding (concurso). Acts in which what is received by the insolvent debtor is notoriously inferior to the consideration performed by them shall be considered gratuitous.

However, liberality payments made as remuneration or in accordance with customs and practices shall retain their effectiveness, provided they are not disproportionate, considering the reason that gave rise to them, the value of what was delivered, and its relevance to the insolvency assets (patrimonio concursal).

Automatic non-opposability related to onerous acts Acts performed by the insolvent debtor (concursado) within one year prior to the opening petition (solicitud de apertura), in the following cases, shall be non-opposable to the insolvency proceeding (concurso), unless it is proven that they are not harmful to it:

1)The constitution or extension of real security interests (garantías reales) or fiduciary guarantees, over assets of the insolvent debtor, in favor of pre-existing obligations or new ones contracted in substitution thereof.
2)The payment of obligations not yet due at the time of the insolvency petition (solicitud del concurso).
3)The payment or objective novation (novación objetiva) of monetary, liquid, and due obligations, if made with other types of assets, unless it is in accordance with custom or what was agreed.

In no case shall acts performed under normal conditions by the insolvent debtor, in the ordinary course (giro ordinario) of their professional or business activities, be ineffective.

Ordinary insolvency non-opposability The ineffectiveness (ineficacia) against the insolvency proceeding (concurso) of other acts of disposal of assets carried out within the five years prior to the opening petition (solicitud de apertura) may be sought, if prejudice was caused to the estate (masa de acreedores), when the insolvent debtor (concursado) knew or should have known the harmful effect of their act. In the case of onerous acts, it shall also be necessary that the party who contracted with the insolvent debtor knew or should have known of the prejudice.

The knowledge of the state of asset insufficiency (insuficiencia patrimonial) on the part of the persons especially related to the insolvent debtor who contracted with them is presumed, unless there is evidence to the contrary.

Standing and procedure for insolvency non-opposability Whoever holds the representation or administration of the insolvency proceeding (concurso) shall have standing to file, on behalf of the insolvency proceeding, the insolvency non-opposability actions (acciones concursales de inoponibilidad) established in this rule. When the insolvent debtor (concursado) represents it, it shall require the consent of the intervenor (interventor). The intervenor may exercise these actions when the insolvent debtor or their legal representatives do not file them within thirty days after receiving the communication urging them to do so, identifying the challenged act or contract and its legal basis.

Any recognized creditor may require the representative of the insolvency proceeding, by any means that reliably proves its receipt, to exercise some non-opposability action (acción de inoponibilidad) against the insolvency proceeding, identifying the challenged act or contract and its legal basis. After thirty days from the receipt of the communication without the insolvency proceeding's representative having filed the non-opposability action, the requesting creditor shall have standing to pursue it, at their own account and risk. Creditors whose insolvency non-opposability actions are successful shall have, regarding the assets or rights subject to the action, a preferential right to receive payment of up to fifty percent (50%) of the balance of their claim (crédito), as well as the reimbursement of the expenses of that process.

The insolvency non-opposability actions regulated in this law shall be processed via the incidental proceeding (vía incidental).

Favorable judgment and effects of insolvency non-opposability The judgment upholding the insolvency non-opposability action (acción de inoponibilidad concursal) shall order the ineffectiveness (ineficacia) against the insolvency proceeding (concurso) and shall order whatever is appropriate for its execution. The rights of third-party good-faith acquirers shall not be affected.

The declaration of ineffectiveness shall condemn the defendant party to restore to the active mass (masa activa) the assets or rights acquired through the ineffective act, together with the fruits received. When this is not possible, they shall be condemned to deliver the value they had at the time the challenged act was carried out, as well as legal interest on said value, from that date.

When the defendant parties to the non-opposable act and the subsequent third-party acquirers have acted in bad faith or with knowledge of the state of asset insufficiency (insuficiencia patrimonial) of the insolvent debtor (concursado), even if ordered ex officio, they shall be jointly and severally condemned to compensate for the other damages caused to the insolvency proceeding.

The contracting parties and third parties involved who must return what was received or perceived may exercise their rights as ordinary creditors of the insolvency proceeding, limited to the value of the obligations they have performed, unless they have acted in bad faith or with knowledge of the state of asset insufficiency of the insolvent debtor, in which case they shall be considered subordinated creditors (acreedores subordinados). If appropriate, the judgment in the incidental proceeding (incidente) must establish the liquid sum to which they are entitled.

Statute of limitations for the insolvency non-opposability action The insolvency non-opposability action (acción de inoponibilidad concursal), regulated in this rule, shall prescribe at five years, counted from the moment it could have been exercised.

SECTION IV

INSOLVENCY PROCEEDING BODIES (ÓRGANOS CONCURSALES)

Appointment of the intervenor When the insolvent debtor (concursado) retains the total administration of their assets, as well as their judicial and extrajudicial representation, a principal intervenor (interventor titular) and an alternate (suplente) shall be appointed, who must meet the following requirements:

1)Be university professionals in business administration, accounting, or any other profession related to the activity of the insolvent debtor, registered with the respective professional association (colegio). Lawyers who also hold at least a bachelor's degree in one of the aforementioned professions may also serve as intervenors.
2)Have at least five years of duly accredited professional experience in their field.
3)Pass the insolvency accreditation courses (cursos de acreditación concursal) given by the Judicial School (Escuela Judicial) or university entities. In the second case, the courses must be equivalent to those given by the Judicial School.

Powers and duties of the intervenor In addition to the powers and duties regulated by other provisions of this law, the intervenor (interventor) shall have the following:

1)Promote the advancement of the insolvency process (proceso concursal) and ensure compliance with what is resolved therein.
2)Verify the information provided by the insolvent debtor (concursado) or their representatives and inform the court of any inaccuracies or anomalies detected.
3)Seek to obtain the information and documentation necessary for the purposes of the process.
4)Advise and supervise the administration of the insolvency assets (activo concursal), as well as the fulfillment of the duties incumbent upon the insolvent debtor. Prior to requesting the court's intervention, they shall suggest to the insolvent debtor the measures they deem appropriate to promote the best possible management.
5)Examine the proposed solutions made by the promoter of the process or the insolvent debtor or their representatives, and inform the court, through a detailed report, regarding their viability. They may suggest the necessary modifications for it to be efficient in relation to the purposes pursued in the insolvency proceeding (concurso).
6)Exercise judicial and extrajudicial actions for the effective protection of the interests of the insolvency proceeding.

Appointment of the insolvency administrator When the insolvent debtor (concursado) is totally or partially separated from the administration of the assets, a principal insolvency administrator (administrador concursal titular) and an alternate (suplente) shall be appointed, who must meet the following requirements:

1)Be university professionals in business administration, accounting, or any other profession related to the activity of the insolvent debtor, registered with the respective professional association (colegio). Lawyers who hold a bachelor's degree in any of the indicated professional branches may also serve.
2)Have at least five years of duly proven professional experience in their field.
3)Pass the insolvency accreditation courses (cursos de acreditación concursal) given by the Judicial School (Escuela Judicial) or university entities. In the second case, the courses must be equivalent to those given by the Judicial School.

Taking into account the complexity of the insolvent debtor's activities and their organizational structure, legal entities whose corporate purpose includes the administration, rescue, or intervention of companies in crisis, duly included in the list prepared for this purpose by the respective office of the Judicial Branch (Poder Judicial) as determined by the Supreme Court of Justice (Corte Suprema de Justicia), may also serve. They must act directly through designated legal representatives, who must meet the requirements provided for individual insolvency administrators.

If the designation is preceded by an acting intervenor (interventor), they shall continue as insolvency administrator unless there is a reasonable cause justifying a different appointment.

Powers and duties of the insolvency administrator In addition to the powers and duties regulated by other provisions of this law, the insolvency administrator (administrador concursal) shall have the following:

1)Administer the insolvency assets (activos concursales) in accordance with the powers granted by the court.
2)Represent the insolvency proceeding (concurso), except for the exercise of personal rights and actions, acts relating to assets that are not part of the insolvency assets (activo concursal), or where the court provides for another form of representation or administration in specific situations.
3)Promote the advancement of the insolvency process (proceso concursal) and ensure compliance with what is resolved therein.
4)Verify the information provided by the insolvent debtor (concursado) or their representatives, when this has not been done previously.
5)Inform the court of any inaccuracies or anomalies detected in the information or documentation of the insolvency proceeding.
6)Seek to obtain the information and documentation necessary for the purposes of the process.
7)Advise and supervise the administration of the assets that the insolvent debtor continues to exercise over the assets subject to the process, as well as the fulfillment of the other duties incumbent upon the insolvent debtor. Prior to requesting the court's intervention, they shall suggest to the insolvent debtor the measures they deem appropriate to promote the best possible management.
8)Examine the proposed solutions made by the promoter of the process or the insolvent debtor or their representatives, when this has not been done previously, and inform the court, through a detailed report, regarding their viability. They may suggest the necessary modifications for it to be efficient in relation to the purposes pursued in the insolvency proceeding.
9)Exercise judicial and extrajudicial actions for the effective protection of the interests of the insolvency proceeding.
10)Assume the exercise of the political rights corresponding to the insolvent debtor in other entities.
11)Assume the functions established for the intervenor (interventor), when the insolvent debtor partially retains the administration of the insolvency assets (bienes concursales) or their legal representation, in relation to the acts and contracts for which the law requires their authorization or consent.
12)Manage, before the respective offices, the delivery of communications issued within the process that cannot be sent directly by technological means.

Appointment of the insolvency liquidator A liquidator (liquidador) shall be appointed when the court orders that the solution of the process is the liquidation of the insolvency assets (activos concursales).

The party serving as insolvency administrator (administrador concursal) or intervenor (interventor) shall assume the liquidation of the assets, unless it is justified to designate another different individual or legal entity, which shall be obtained from the list of insolvency administrators.

Powers and duties of the insolvency liquidator In addition to the powers and duties that this law assigns to the liquidator (liquidador), they shall have the following:

1)Continue the administration of the insolvency assets (activos concursales) while they are being liquidated.
2)Continue the representation of the insolvency proceeding (concurso), except for the exercise of personal rights and actions, acts relating to assets that are not part of the insolvency assets (activo concursal), or where the court provides for another form of representation in specific situations.
3)Promote the advancement of the insolvency process (proceso concursal) and ensure compliance with what is resolved therein.
4)Verify the information provided by the insolvent debtor (concursado) or their representatives, when this has not been done previously.
5)Inform the court of any inaccuracies or anomalies detected in the information or documentation of the insolvency proceeding.
6)Seek to obtain the information and documentation necessary for the purposes of the process.
7)For liquidation purposes, examine the proposals previously made by the promoter of the process or the insolvent debtor or their representatives.
8)Exercise and continue judicial and extrajudicial actions for the effective protection of the interests of the insolvency proceeding.
9)Assume the exercise of the political rights corresponding to the insolvent debtor in other entities.
10)Manage, before the respective offices, the delivery of communications issued within the process that cannot be sent directly by technological means.

Selection criteria and appearance in the process The intervenors (interventores), administrators (administradores concursales), and insolvency liquidators (liquidadores concursales) shall be selected from a list prepared, through competitive examinations, by the office authorized by the Supreme Court of Justice (Corte Suprema de Justicia). Members of the list may not reject the designations made to them, except for duly justified reasons, before the respective office. Once notified by any means they have registered, they must appear in the process within the next three days.

For the designation, the ordinary course (giro ordinario) of the economic activity of the insolvent debtor (concursado), when carried out, shall be considered, preferentially persons specialized in the respective branch. If there are several qualified persons, they shall be selected strictly according to their turn within the list.

Incompatibility and prohibitions The following may not be appointed as intervenors, administrators (administradores concursales), or insolvency liquidators (liquidadores concursales):

1)Those who are legally disqualified from administering their own or others' assets.
2)Those who have worked for or provided services of any kind to the insolvent debtor (concursado) or to the persons especially related to them, within the five years prior to the opening of the insolvency proceeding (concurso).
3)Those who are persons especially related to the insolvent debtor.
4)Those whose domicile is outside the Republic of Costa Rica.
5)Those who have been removed by a final resolution (resolución firme) from an insolvency office (cargo concursal) during the year preceding the time of designation.
6)Those who have submitted final management accounts in another insolvency process and these have been rejected by a final resolution in the year preceding the designation.

Challenge (Recusación) The intervenors, administrators, and insolvency liquidators may be challenged (recusados) for any of the causes of incompatibility or prohibition established by law, as well as those provided for by civil procedural law for the challenge of experts.

The procedure shall be that provided for the challenge of experts in the cited legislation, and its processing shall not produce suspensive effects.

Alternates The alternate intervenors, administrators, and insolvency liquidators (suplentes) shall assume their functions immediately in the event of temporary or definitive absences of the principals (propietarios) and also in those matters in which the principals are prevented from participating because they have a personal interest in conflict with those of the insolvency proceeding (concurso).

Remuneration The intervenors, administrators, and insolvency liquidators shall have the right to remuneration charged to the estate (masa).

The Supreme Court of Justice (Corte Suprema de Justicia) shall regulate the tariff to fix the remuneration of each of them. It must consider the complexity of the matter and the functions they exercise, the duration of the offices, the amount of the assets and liabilities, as well as the result of the management. They shall earn monthly fees while they remain in the exercise of their offices, when the insolvency proceeding continues or carries out economic activities.

At the request of the interested party, the court shall set the corresponding fees. The petition must justify the intended amount.

In the event of cessation, removal, or resignation, the procedure shall be as indicated, but the estimation of fees shall be proportional to the stage of the process and the work performed by the professional.

Removal Ex officio or at the request of any interested party, the court may remove intervenors, administrators, or insolvency liquidators from office for unjustified delay in their management or any other serious breach of their functions.

When urged by an interested party, the incidental proceeding (trámite incidental) shall be followed.

The filing of appeals against the resolution ordering removal shall not prevent the assumption of office by the alternates (suplentes), while the challenges are resolved.

Removal shall not imply the loss of the fees to which the removed person is entitled, up to that point.

Reports Within the five days following the end of each calendar quarter, the acting intervenors, administrators, and insolvency liquidators must submit a detailed report of their management and the relevant aspects for the insolvency proceeding (concurso).

If necessary, they shall attach the documentation supporting what is reported. In addition to the reports they must submit in accordance with this law, ex officio or at the request of an interested party, the court may order them to submit specific reports or reports on the general state of the insolvency proceeding.

When the insolvent debtor (concursado) partially or totally retains the administration of the insolvency assets (bienes concursales), they shall be obliged to render quarterly reports of that management, as well as any other report requested by the court.

Liability The intervenors, administrators, and insolvency liquidators shall be liable, to the debtor and the creditors, for the damages caused to the estate (masa) arising from their acts and omissions contrary to the law or performed without due diligence.

The action shall be processed via the insolvency incidental proceeding (incidente concursal) and shall prescribe at two years, counted from the moment the legitimate interested party was able to assert it. The party filing it shall do so at their own account and risk.

If the judgment includes an award for damages, the creditor or creditors who have sued in the interest of the estate shall enjoy the benefits that this law grants for judgments upholding non-opposability actions (acciones de inoponibilidad) for acts harmful to the insolvency proceeding.

Rendering of final accounts The administrators, intervenors, and insolvency liquidators must render an account of their management within the fifteen days following the conclusion of their functions. By unanimity of the creditors appearing in the process with the consent of the insolvent person (persona concursada), the duty to render accounts may be waived.

The account shall be made known to the interested parties for a period of fifteen days. It shall be approved if there is no founded opposition, there is no discrepancy with what is documented in the file, and it does not contravene the law. Otherwise, its correction shall be ordered within a period of five days. The presented account shall be rejected if it is not satisfactorily corrected, unless, for a single time, a second warning is issued in exceptional cases, when the obligor's intention to rectify the indicated defects is evident.

If the final account presented is not formulated or is rejected, in the resolution issued, the court shall inform the Judicial Branch (Poder Judicial) office in charge of the respective lists for the appropriate administrative action, without prejudice to the civil and criminal liabilities they may have incurred.

Registration in public registries The designation and removal of administrators, intervenors, and insolvency liquidators, as well as variations in their administration and representation powers, shall be registered in the corresponding public registries.

Management of the lists The office designated by the Supreme Court of Justice (Corte Suprema de Justicia) shall maintain a list of persons registered as intervenors, administrators, and insolvency liquidators, which must contain, at a minimum, the following:

1)The name and professional background of the registered persons.
2)The designations and cessations from office for each one, with due mention of the reasons.
3)The upheld challenges (recusaciones acogidas) and their grounds, against the professionals or legal entities exercising the offices.
4)The liability actions upheld by final judgment (sentencia firme), against those who have held insolvency offices (cargos concursales), with an indication of the facts and legal grounds of the judicial decision.
5)The final rejections of the management accounts they have submitted.
6)The civil, criminal, and administrative sanctions imposed on them on the occasion of the exercise of their offices.
7)Any other fact or circumstance, at the discretion of the judicial courts, that is relevant for the purpose of evaluating the continuation or renewal of the individuals and legal entities that make up the lists.

Public and private entities shall inform the designated Judicial Branch (Poder Judicial) office of any fact they consider relevant for the administrative management of the lists.

Submission of the initial report Within the fifteen days following the expiration of the deadline for creditors and interested parties to appear in the process to assert their rights, the intervenor (interventor) or insolvency administrator (administrador concursal), as applicable, must render the initial report on general aspects of the insolvency proceeding (concurso), the insolvency assets, and the insolvency liabilities. If, upon expiration of the deadline for the exercise of the rights of creditors and third parties, the person who must render the report has not been notified of their designation, the fifteen-day deadline to comply with this shall begin to run from that notification.

Exceptionally, the indicated deadline may be extended only once for justified reasons, at the court's discretion, provided the request is submitted before its expiration. The extension may not exceed fifteen days, counted from the day following the expiration of the original deadline.

General aspects of the report The general summary of the report shall contain the following:

1)The analysis of the data, information, and documentation supplied by the insolvent debtor (concursado) or their representatives, when requesting the insolvency proceeding (concurso), or when ordered upon its opening.
2)A summary of the principal decisions and actions of the insolvency administration up to that point.
3)A technical and detailed assessment of the insolvency proposals that have been submitted.
4)A reasoned opinion on the financial situation of the insolvency proceeding and, where applicable, of the company and the productive units that comprise it.
5)Proposed solutions to the financial crisis deemed suitable, when the debtor has failed to do so in a timely manner. They may consist of potential agreements with creditors, interested third parties, or a liquidation plan, provided they meet the requirements set forth in this law for the debtor's proposals.
6)Any other relevant data and circumstances for the processing of the insolvency proceeding.

Inventory and Valuation of Assets A separate inventory of assets shall be presented, with their market value at the time of preparation.

In the case of insolvent companies, a comprehensive valuation of these shall also be included.

Likewise, if deemed useful or convenient, an individual estimation of the productive units that make up the business or economic activities shall be presented.

When the debtor has previously provided the list of their assets, the insolvency intervener (interventor) or administrator (administrador concursales) may expressly ratify it, note its variations, or rewrite it if they deem it necessary. In any case, they shall indicate the value of the assets at the time of complying with the provisions herein.

If the insolvency intervener (interventor) or the administrator (administrador) state that they lack objective parameters to determine the value of assets, the court may order the appointment of experts or establish the bases for their valuation. However, credit instruments payable on a term or on demand in favor of the debtor and those negotiable on stock exchanges, as well as assets commonly traded in specific markets or auctions, shall not be subject to an expert appraisal and, for the purposes of the insolvency proceeding, the value obtained from their trading on the respective market shall apply.

Insolvency Liabilities Separately, a report shall be provided on all insolvency liabilities (pasivos concursales) that appear in the accounting records or in documentary form, those that were included in the list supplied by the debtor, if submitted, as well as the credit legalizations (legalizaciones de crédito) filed on time. If the insolvency proceeding has been requested by a creditor, their initial claim shall be considered as a legalization (legalización) if they were obligated to file one.

For each of the insolvency claims (créditos concursales), it shall indicate in a reasoned manner whether it admits or rejects them partially or totally. Regarding those admitted, it shall state in a reasoned manner the respective amounts, maturity dates, existing guarantees of any nature, principal, interest, and other outstanding items, the applicable interest rate, and whether they should be considered privileged, common, subordinated, litigious, or subject to a condition.

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When the complexity of the insolvency proceeding so requires, those exercising the functions of insolvency intervention, administration, or liquidation may request authorization from the court to delegate powers to the assistants (auxiliares) they propose, or from those included in the lists created for this purpose by the Judicial Branch, indicating the criteria for establishing their remuneration.

If assistants (auxiliares) are appointed, the court shall specify their functions and determine the remuneration, which may be charged against the compensation corresponding to the administrator (administrador), intervener (interventor), or liquidator, in proportion to the functions they exercise, or be autonomous, when the court so decides in justified cases considering the complexity of the insolvency proceeding and the functions assigned.

When the insolvency intervener (interventor), administrator (administrador), or liquidator is not a lawyer and considers it necessary, they may request the appointment of a legal professional as a legal assistant (auxiliar jurídico), for which the rules set forth above shall be followed.

If the request is granted, a period of five days shall be granted to accept the appointment, under warning that another person will be appointed in case of refusal or omission, if necessary.

A rejected request may be filed again if justified by supervening circumstances.

Delegated assistants (auxiliares) shall be subject to the common regime of incompatibilities, prohibitions, recusals, removal, liability, rendering of accounts, and registration in public registries, when necessary.

The Supreme Court of Justice is authorized to regulate the administration of lists of assistants (auxiliares) in the same manner provided for insolvency interveners (interventores), administrators (administradores), and liquidators.

The appointments, terminations, sanctions, rejections of account renderings, and any other aspect considered relevant shall be reported to the Judicial Branch office that manages the lists of insolvency interveners (interventores), administrators (administradores), and liquidators.

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Call to Meeting Creditors' meetings shall be called only in the cases provided for by law, by means of a judicial resolution that shall state, in order, the matters to be addressed.

This resolution must be notified to all participants at least five days in advance, unless a legal rule establishes a different advance notice period.

Holding of Meeting Creditors' meetings shall be held at the place, day, and time indicated in the resolution calling them. They shall be chaired by the judge.

They may only be postponed for exceptional reasons, at the discretion of the court. Once a meeting has begun, it may be suspended for a duly justified cause or because so agreed by a simple majority of the creditors present with voting rights.

The unjustified absence of the debtor or their legal representatives shall not prevent the meeting from being held. If it is the insolvency intervener (interventor), administrator (administrador), or liquidator who fails to appear, the start of the proceeding may be postponed for as long as necessary according to the circumstances, as deemed by the court. If it proves impossible for them to appear, the meeting shall be rescheduled without prejudice to the procedural, legal, and administrative consequences derived from the omission, when it lacked just cause.

The meeting shall be held regardless of the number of creditors present with voting rights and the percentage of liabilities represented at the proceeding. If no creditor with voting rights appears, the proposals that were to be considered shall be deemed rejected.

The court may authorize the presence of persons who are not a party, legal representatives, or attorneys in the proceeding, if deemed convenient according to the circumstances.

Creditors with Voting Rights The following shall have the right to vote at meetings: admitted common insolvency creditors within the proceeding, even if their admission is challenged or subject to an unfulfilled resolutory condition.

The right to vote shall also extend to creditors:

1)With special privilege, regarding proposals that may affect their claim.
2)With general privilege, when they are prevented from exercising their rights outside the insolvency proceeding or the aspects of the vote may affect their claim.

In all cases, the vote cast by each creditor must be known, in order to verify the computation of the necessary majorities.

Creditors without Voting Rights The following creditors may attend the meeting and participate in it, without voting rights:

1)Those considered specially related to the debtor according to this law.
2)Late-filing creditors regarding whom no decision on their admission or rejection has been issued.
3)Rejected creditors with a pending challenge proceeding.
4)Creditors of litigious claims or claims subject to a suspensive condition.
5)Creditors of subordinated claims.

Majorities of Persons and Capital When proposals are to be considered, agreements shall be adopted by the concurrent majority of votes of persons and capital.

The majority of persons shall be obtained by a simple majority of creditors with voting rights attending the meeting. The vote of a creditor who has adhered to a proposal under the terms provided by this law shall also be counted.

To determine the majority of capital, the amounts of the admitted insolvency claims of the creditors who have appeared in the proceeding at the time of the vote shall be considered. Unless this law provides otherwise for special cases, the ordinary majority of capital votes shall be required.

Representation of Creditors Creditors may be represented at the meeting. However, the debtor, persons specially related to the debtor, the insolvency intervener (interventor), the administrator (administrador), the liquidator, or an insolvency assistant (auxiliar concursal) shall not be admitted as representatives.

Those appearing as representatives of public or private creditors must possess sufficient authority to vote on behalf of their represented party.

List of Attending Creditors Prior to the start of the meeting, a list shall be prepared with the attending creditors, their representatives, attorneys, the admitted amount of their claims, and the classification to which they correspond.

Documentation of the Meeting The meeting shall be documented in accordance with the provisions of civil procedural legislation regarding oral hearings.

If votes are cast in writing, they shall remain in the custody of the court until the resolution ruling on the adopted agreements becomes final.

Approval of Agreements Agreements adopted at a meeting must be approved (homologados) by the court within the following five days. For this purpose, their legality and the computation of the majorities required by this law shall be verified. Under no circumstances shall an agreement that attempts to affect the guarantees of privileged creditors without their consent be approved (homologado).

The resolution shall provide a detailed recount of the votes cast by each creditor. However, considering the circumstances, a list may be prepared including the manner in which each creditor voted, which shall be attached to the main file.

If necessary, the bases for the proper execution of the approved (homologado) agreement shall be established.

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SECTION V

INSOLVENCY ASSETS

Composition of Assets The assets of the insolvency proceeding shall consist of the property and rights of economic content belonging to the debtor as of the date of its opening, those recovered during its processing, and those acquired subsequently until its conclusion.

Property and rights that are legally exempt from seizure are excluded.

Verification of Assets Once the period for interested parties to appear in the insolvency proceeding has expired, provided all assets have been valued, the inventory and valuation shall be made known to the participants in the proceeding for a period of ten days.

Opposition to the inventory or valuation of assets shall be processed via an incidental proceeding (vía incidental). Whoever opposes must submit, with their objection, the respective evidence, and any valuation performed shall be covered by them.

An objection that lacks grounds or an offer of evidence shall be rejected outright, when evidence is necessary.

Approval or Rejection of the Inventory and Valuation If there is no founded opposition, the court shall approve the inventory and the value of the assets, unless it deems it necessary to conduct its own evidentiary proceedings beforehand.

If the incidental proceeding (incidente) is upheld, the objector shall be reimbursed for the expenses incurred when the modification of the valuation, upwards or downwards, exceeds twenty percent (20%).

When the inventory and valuation of assets are rejected totally or partially, the court shall order the corresponding modifications if it has the elements to do so; otherwise, it shall adopt the necessary measures for its conclusion.

Inclusion of Assets Once the inventory is approved by final resolution, only requests from legitimate interested parties to incorporate assets into the body of assets (acervo) of the insolvency proceeding shall be admitted, when the request is based on knowledge of supervening facts or facts that the petitioner assures they were not previously aware of, and the matter has not been debated in a prior objection to the inventory.

Requests for inclusion of assets filed by creditors shall be processed via an incidental proceeding (vía incidental).

Exclusion and Restitution of Assets Third parties, by any means that allows proof of receipt, may directly request the insolvency intervener (interventor), administrator (administrador), or liquidator to exclude assets or rights from the inventory. They may also request their restitution when they are in the possession of the insolvency proceeding; in any case, they must reliably prove their ownership. Restitution shall not proceed when the debtor is in possession of the assets by virtue of a title or legal cause that permits it. If the third party's request is rejected or has not been accepted within five days, they may file an insolvency incidental proceeding (incidente concursal) to claim their right.

The insolvency intervener (interventor) or administrator (administrador) who expressly admits the third party's request must report it in the administration report for the respective period. When the insolvency intervener (interventor), administrator (administrador), or liquidator admits the exclusion or restitution of assets that are essential for the continuity of the business, professional, or economic activity of the insolvency proceeding, they shall require judicial authorization. Prior to deciding on this authorization, the incidental proceeding (trámite incidental) shall be followed, in which it shall be proven that the asset belongs to the claimant.

If restitution proceeds, the third party must pay the insolvency proceeding for conservation expenses and all other items that, according to the existing legal relationship, must be satisfied up to that point.

Impossibility of Restitution If the assets and rights subject to restitution have been disposed of by the debtor to a third party in good faith, the harmed owner may choose between the assignment of the right to receive the consideration, if the acquirer has not yet paid it, or demand from the insolvency proceeding the recognition of a common claim equal to the value of the asset at the time of disposition, plus the legal interest accrued up to the time of the opening of the insolvency proceeding.

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Person in Charge of Conservation and Administration The insolvency assets and rights shall be conserved and administered by the debtor, unless the court orders otherwise in accordance with this law.

If the debtor is removed from the conservation and administration of the assets, the insolvency administrator (administrador concursal) shall take possession of them. They must perform all acts necessary to take possession of the commercial and legal books, if any, as well as the documents relating to the asset pool (masa activa) and the business, professional, or economic activity of the debtor.

If they encounter difficulty in occupying them, they shall request the intervention of the court, which shall adopt the necessary measures to place them in possession.

Conservation and administration shall be carried out in the manner most convenient for the interests of the insolvency proceeding.

Access to Financial and Tax Information Whoever exercises the insolvency administration shall have free access to banking, financial, and tax information relating to the debtor, without the respective secrecy rules being applicable against them.

Anticipated Disposal of Assets Anticipated disposal of assets may be authorized when they may be lost, diminished, or deteriorate, or when their sale is useful or advisable for some special reason. It may also be authorized when necessary to cover urgent administration and conservation expenses, or to pay due support claims or labor claims and there is insufficient liquidity. The court shall order the modality to be used for such disposals.

In the case of fruits or perishable goods, when it cannot be postponed, their sale may be carried out without prior judicial authorization, but notice of the act of disposal performed must be given within the following five days. The price shall be the current market price at the date of sale.

Occupancy of the Debtor's and Family Unit's Home The debtor and their family unit may continue to occupy the house included in the insolvency estate (haber concursal) that they occupied at the time of the declaration of insolvency, as long as it is not sold or awarded to a third party.

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SECTION VI

INSOLVENCY LIABILITIES

For the purposes of the insolvency proceeding, claims are classified as claims against the estate (créditos a cargo de la masa) and insolvency claims (créditos concursales).

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Definition The following are considered claims against the estate (créditos a cargo de la masa):

1)The expenses and remuneration essential for the processing of the insolvency proceeding. Unless otherwise provided by law, professional fees of those representing the debtor and the expenses and fees incurred by creditors to assert their rights in the insolvency proceeding are excluded.
2)The expenses necessary for the conservation, administration, and eventual liquidation of the insolvency assets, originating from the insolvency proceeding.
3)Claims of any nature, originating after the declaration of insolvency, unless the law considers them insolvency claims (créditos concursales).
4)Funeral expenses of the debtor who is a natural person and of their dependent family members, when they lack sufficient assets to cover them.
5)The items from strictly essential medical assistance provided to the debtor who is a natural person, their minor children or children with special needs, their spouse or cohabiting partner, their father or mother, during the processing of the insolvency proceeding. Payment shall not proceed when the indicated persons have sufficient assets to cover them or the medical assistance is covered by insurance.
6)Those to which this law grants this classification.

Payment Claims against the estate (créditos a cargo de la masa) are not mutually exclusive and must be paid, in the first place, with assets that are not specially encumbered in favor of creditors.

Whoever exercises the insolvency administration must make payment immediately or upon the maturity of the claim, when it is evident, or when required by the interested party, if the insolvency proceeding has sufficient liquidity. In the absence thereof, they shall proceed to the anticipated disposal of assets, in accordance with the stipulations of this law.

The interested party must manage their payment directly before the insolvency administration. In case of refusal, they may take action via an incidental proceeding (vía incidental).

Privileged creditors over specific assets must bear the expenses established in sections 1 and 2 of the preceding definition, insofar as they specifically benefit them and, proportionally, for what is done in the common interest of all creditors.

Support and labor creditors shall only have to contribute to the indicated expenses when the satisfaction of their claims implies the insufficiency of assets to cover them.

The insolvency court shall set the amount of the contribution for creditors with a special privilege, or for support or labor creditors, when appropriate, in the main file. In judicial proceedings processed separately, it shall be the responsibility of the court hearing them to determine the amounts chargeable to the executing creditor before making the corresponding payments. When the execution is extrajudicial, prior to the payment of the privileged claim, the insolvency court must be requested to set the amount it must bear to cover the claims against the estate (créditos a cargo de la masa).

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Classes and Priority Unless otherwise provided by law, insolvency claims (créditos concursales) shall have, in their order, the following degrees of preference:

1)Claims with special privilege.
2)Claims with general privilege.
3)Common claims.
4)Subordinated claims.

Claims with Special Privilege Creditors of claims with special privilege shall have a preferential right to payment of their claims from the proceeds of the disposal of the assets upon which the privilege falls, unless the law provides another priority criterion for special cases. They may renounce their guarantee totally or partially.

The following are considered claims with special privilege, those guaranteed by:

1)Mortgages.
2)Pledges.
3)Guarantee trusts (fideicomisos de garantía).
4)Security interests (garantías mobiliarias), except those arising from judicial seizures for claims that did not previously enjoy them.
5)Right of retention, when the creditor is exercising it.
6)Marital property rights (bienes gananciales).
7)Others provided by law for special cases.

When one or more assets guarantee different claims, the preference for payment shall be determined by the corresponding substantive law. Claims secured by legal mortgages or pledges shall be paid first, before those secured by mortgages or pledges of another type.

In any case, the marital property right (derecho ganancial) shall be understood as subordinated to the payment of other claims with special privilege that encumber the affected assets.

If, upon executing the guarantee, any surplus remains in favor of the insolvency proceeding, it shall form part of the insolvency asset pool (acervo concursal). If a shortfall remains in favor of the creditor, it shall be considered a common claim.

From the proceeds obtained from the disposal of the guaranteeing assets, ten percent (10%) shall be reserved in case there are no other sufficient assets to pay, in whole or in part, support claims, labor claims, and those corresponding to compensation for damage to the health and life of persons. If, after covering these claims, a remainder is left, it shall be distributed proportionally among each of the creditors with special privilege who contributed to the reserve.

Claims with General Privilege Creditors with general privilege shall have a preferential right to the recognition and payment of their claims, over common and subordinated creditors, from the proceeds of the entire patrimony of the insolvency proceeding not affected by special privileges. They may renounce their guarantee totally or partially.

The following are considered claims with general privilege:

1)Support claims.
2)Labor claims.
3)Compensation concerning damage to health or life, not covered by insurance.
4)Others provided by law for special cases.

In the absence of a specific legal provision, for their recognition and payment, the indicated order shall be respected. If there are multiple creditors within the same category of claims with general privilege, the principle of equal treatment among insolvency creditors (igualdad concursal) shall govern among them.

Support and labor creditors shall be paid immediately by the insolvency proceeding with respect to their monetary rights, when so required by virtue of a final judgment establishing them. If the claims are not satisfied immediately, the interested party shall notify the court, which shall adopt immediate legal measures for the fulfillment of the obligations. Support and labor creditors with a final judgment in their favor who have not initiated its execution may also directly require payment from the insolvency proceeding under the previously indicated terms.

Common Claims Those claims not included as privileged, whether special or general, nor as subordinated, shall be considered common insolvency claims (créditos concursales comunes).

Subordinated Claims Subordinated claims shall be paid, if possible, after the common claims are covered in their entirety.

The following claims shall be subordinated:

1)Those to which the creditor voluntarily assigns that condition.
2)Those of persons specially related to the debtor, unless they are insolvency claims with general privilege.
3)Others to which the law grants this classification.

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Duty to Legalize Within the period granted to assert their rights, creditors of monetary obligations must legalize (legalizar) their claims, unless:

1)They appear on the list supplied by the debtor.
2)They are recognized in a judgment.
3)They are not required to be collected within the insolvency proceeding, in accordance with this law.

Requirements for Legalization The legalization (legalización) may comprise several claims of the same creditor. The qualifications of the party legalizing, the title or cause of the claim, the precise amounts owed, and its preference, if any, shall be stated. Likewise, the real, personal, or other nature of any guarantees held must be indicated. The documents evidencing the obligation shall be presented, in accordance with the requirements established by civil procedural legislation for the collection of monetary obligations. It must also contain a brief statement of the facts on which the claim is based and the corresponding evidence.

If the request does not meet the indicated requirements, the correction of the specifically noted omissions shall be ordered, with the warning that, if not corrected within five days, it will be rejected without prejudice to its subsequent presentation.

Claims Recognized in a Prior Judicial Decision or Arbitral Award Creditors of monetary claims recognized by a final judicial decision or arbitral award, issued prior to the opening of the insolvency proceeding, must prove their right before the insolvency court with suitable documentation, without being subjected to the verification procedure.

However, the debtor, the insolvency intervener (interventor), the insolvency administrator (administrador concursal), or any creditor, via an incidental proceeding (vía incidental), may request that the total or partial extinction or payment of the claim be decreed for supervening causes. Challenges that are not reasoned or are filed without proposing evidence, when evidence is necessary, shall be rejected outright.

Litigious Rights In the case of litigious rights being claimed outside the insolvency proceeding, from which monetary obligations could arise or which could affect the asset pool (masa activa), the alleged creditor may legalize (legalizar) the litigious claim by referencing the details of the respective proceeding.

The challenge of a claim whose validity or effectiveness is being debated in a non-criminal proceeding prior to the opening of the insolvency proceeding shall be subject to the rules of pre-judiciality.

If the insolvency proceeding orders payments or distributions of assets to creditors, the amount that proportionally and according to the priority levels could correspond to claims admitted as litigious shall be reserved. The same rule shall apply to objected and challenged claims.

The right of the creditor whose claim ceases to be litigious upon having been declared by a final judgment or award shall be considered recognized, which must be proven with suitable documentation.

Legalization by Guarantors, Sureties, or Co-obligors of the Debtor Without prejudice to the creditor's right to verify their claim and participate in the insolvency proceeding, the guarantors (fiadores), sureties (avalistas), and co-obligors of the debtor, who have not yet paid a debt of the debtor, shall have the right to legalize (legalizar) a claim so that the necessary sum to pay the respective obligation is set aside, up to the extent of the dividend agreed for common creditors. If they should totally or partially pay the debt, they shall have the right to participate in the insolvency proceeding according to the proportion corresponding to them.

Claims with Suspensive or Resolutory Condition Claims with a suspensive or resolutory condition shall be included in the list of creditors, expressly stating their conditional nature. The subsequent inclusion or exclusion of the claim, as a consequence of the fulfillment or non-fulfillment of the condition, shall not affect the validity of the proceedings carried out up to that point.

Claims Subject to Prior Excussion Claims that cannot be enforced against the debtor without the prior excussion of the principal debtor's patrimony shall be considered claims with a suspensive condition.

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Procedure Once the initial report on the liabilities prepared by the insolvency intervener (interventor) or administrator (administrador concursal) has been submitted, it shall be made known to the debtor and other participants for a period of ten days.

Within the indicated period, interested parties may:

1)Request the addition of claims that have been omitted from the report but included in the list of liabilities supplied by the debtor.
2)Request the inclusion of claims timely legalized (legalizados) but omitted from the report.
3)Challenge claims admitted in the report.
4)Object to the rejection of claims included in the report.

If applicable, the addition to the report shall be ordered within the following five days.

The challenge of admitted claims and the objection to rejected claims shall be processed via an incidental proceeding (vía incidental). They shall be rejected outright when the request is not substantiated or when an offer of evidence is omitted, if evidence were necessary.

Effects of the Lack of a Founded Objection and the Incidental Resolution The claims admitted in the initial report that have not been objected to in a timely and proper manner shall be considered insolvency claims (créditos concursales), as well as those recognized by a final judgment.

The claims rejected in the initial report corresponding to creditors who, having appeared in the proceeding at the time it was made known, did not challenge it in a timely and proper manner, shall be definitively excluded from the insolvency proceeding.

Creditors rejected in the report, who had not appeared in the proceeding at the time it was made known and who have not challenged it, shall be excluded from the insolvency proceeding, but may legalize (legalizar) their claim as late-filing creditors.

Definition and scope of application The following are late-filing creditors:

1)Those who, being obligated to do so, formalize their credits outside the time limit granted to assert their rights.
2)Creditors rejected in the report who were not present when it was disclosed and who did not challenge it in a timely manner.

Procedure The formalizations of late-filing creditors shall be processed through the insolvency proceeding incident (incidente concursal), with the participation of the debtor, the person in charge of the insolvency administration, and other interested parties.

Formalizations submitted after the insolvency agreements (acuerdos concursales) have been executed or after the entire insolvency estate has been liquidated and distributed shall not be admitted.

The incidents shall be suspended by operation of law and shall be processed once matters relating to the credits of non-late-filing creditors have been resolved at first instance. Their submission and processing shall not interfere with the main proceeding.

Effects of the admission of late-filing credits The admission of late-filing credits shall not affect what has been processed and resolved previously in the insolvency proceeding. The creditor shall take the proceeding in the state in which it finds itself and shall lose any privilege corresponding to its credit. It shall be taken into account in distributions pending execution, without any right to those previously made.

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SECTION VII

INSOLVENCY AGREEMENTS

Timing and modification The debtor's proposals shall only be admissible if they are submitted with its initial request for commencement, or within the time limit granted for their submission in the judgment granting the insolvency proceeding, when it has been filed against the debtor.

It may modify the proposal for qualified reasons, provided it does so at least ten days in advance of the date scheduled for the creditors' meeting (junta de acreedores). No hearing shall be granted by judicial resolution on the modifications. Interested parties may consult the existence and content of the modifications submitted in a timely and proper manner by the debtor.

The insolvency supervisor or administrator (interventor o administrador concursal) must analyze the modifications formulated in a timely manner and shall issue its opinion orally at the creditors' meeting for the consideration of the proposals made.

Adhesions Before the creditors' meeting, any creditor may adhere in writing to the proposal or proposals made, provided there have been no modifications and the agreement is total with respect to said creditor. If there are main and subsidiary proposals, it shall state specifically if it disagrees with any of them. If it omits this, its adhesion to all proposals shall be understood, in the order of priority in which they must be voted upon.

Adhesions shall be definitively counted as votes in favor of the proposal.

When, before the holding of the meeting, the adhesion of sufficient creditors has been obtained for the approval of a proposal, the court may be requested to homologate it, in accordance with the provisions for extrajudicial agreements (acuerdos extrajudiciales).

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When the debtor has failed to submit proposals to resolve its financial crisis in a timely and proper manner, creditors or third parties may submit them, at least ten days in advance of the date scheduled for the creditors' meeting.

They may consist of potential agreements with creditors, interested third parties, or a liquidation plan, provided they meet the requirements set forth in this law for the debtor's proposals.

No hearing shall be granted by judicial resolution on those submitted. Creditors and the debtor may consult the existence and content of these proposals, prior to the holding of the meeting.

The insolvency supervisor or administrator must analyze the proposals of creditors and third parties, in order to issue its opinion orally at the meeting convened for their consideration and voting.

The legal regime provided for adhesions to those formulated by the debtor shall be applicable to the proposals of creditors and third parties.

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Convening In the resolution that discloses the initial report of the insolvency supervisor or administrator, a creditors' meeting shall be convened, which must be held between the twenty-fifth and thirtieth day following its issuance.

Holding the meeting The meeting shall address the scheduled activities in the programmed order unless, for qualified reasons, the court deems it appropriate to follow a different order.

The ratification, clarification, correction, or adjustment of the proposals to be considered shall be ordered only when they are deemed unclear, imprecise, or incomplete and have not been previously corrected.

The court may order reasonable recesses when debated points arise in the meeting that justify them. Its continuation shall be pursued as soon as possible, without the suspension exceeding five days, unless a simple majority of the creditors present with voting rights agree on a longer period.

Consideration of the debtor's proposals In addition to what the court includes in the convening order, if the debtor has made proposals in a timely manner, the meeting shall proceed to their discussion and voting, in the respective order. The insolvency supervisor or administrator shall present its opinion before their discussion, on the modifications incorporated in a timely manner by the proponent.

If modifications consented to by the debtor arise from the discussion of the proposals, they shall be incorporated for subsequent voting. The court shall reject the abusive inclusion of modifications that hinder the purposes of the insolvency proceeding.

Voting on the debtor's proposals The debtor's proposals shall be voted on by the creditors, one by one, in the established order of priority. If there are differentiated proposals, each creditor shall vote only on the proposals corresponding to its classification or category. If it falls within different classes or categories, it shall vote in each of them.

Consideration of proposals by the insolvency administration, creditors, or third parties When the debtor has failed to propose a resolution to its financial crisis in a timely manner, the insolvency supervisor or administrator shall present its opinion on the proposals made by creditors or third parties in a timely manner.

These proposals, as well as those presented by the person exercising the supervision or insolvency administrator, shall be discussed in the chronological order in which they were incorporated into the proceeding.

Voting on proposals by the insolvency administration, creditors, or third parties The proposals of the supervisor, insolvency administrator, creditors, or third parties shall be voted on one by one, in the order in which they were submitted. Proposals submitted jointly shall be voted on according to the priority established by the proponent or, failing that, according to the stated order.

Rules for the approval of general proposals that do not affect privileged credits or special categories Except as provided for agreements that include privileged credits or categories of creditors, for a proposal to be considered accepted by the meeting, in addition to a majority vote of persons, the following shall be required:

1)An ordinary majority of capital votes, when the proposal contains debt reductions (quitas) equal to or less than half the amount of the credits, with a term of less than three years for their payment.
2)At least sixty-five percent (65%) of the capital votes, when the proposal contains grace periods (esperas) with a term of more than three years, but in no case exceeding ten, or debt reductions greater than half the amount of each credit.
3)At least thirty percent (30%) of the capital votes, when the proposal consists of full payment of the credits within a term of less than two years or the immediate payment of matured credits with a debt reduction of less than twenty percent (20%).
4)An ordinary majority of capital votes, in other cases not provided for in the preceding subsections.

Special rules for the approval of general proposals that affect privileged credits General agreements that involve affecting credits of privileged creditors of the same class, and which in turn do not contemplate differentiated treatment within that class, shall have effect with respect to those who voted in favor of the proposal or adhered to it.

They shall also affect the other creditors with special or general privilege, when the capital percentages provided for in the preceding article are obtained, within the respective privileged class.

Special rules for the approval of proposals that imply differentiated treatment by categories, within classes of insolvency credits For a proposal that attributes singular treatment to a specific category of creditors defined by their characteristics, but belonging to one of the classes established in this law, to be considered accepted, the capital percentages indicated above shall be indispensable, with respect to the creditors of the determined category and, also, of the creditors of the same legal class who are not part of that category.

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Total or partial assignment of assets In the case of an agreement for the total assignment of assets in payment or for payment to creditors, the assets and rights listed in the inventory approved in the insolvency proceeding shall be considered assigned.

If the assignment is partial, the proposal must be accompanied by a list of the assets or rights subject to the assignment.

In all cases, the rights of privileged creditors must be safeguarded.

Specific assignment of assets in payment When the proposal's purpose is the assignment or total or partial transfer of specific assets to particular creditors, the individual consent of the assignees or acquirers shall be necessary.

Assignment for liquidation and payment When the proposal's purpose is the total or partial assignment of assets for payment to creditors, the maximum term for disposition shall be established, which may not exceed two years.

The liquidation functions shall be assumed by the insolvency supervisor or administrator, if not agreed otherwise.

Assumption of liabilities Unless agreed otherwise, in the case of an agreement for the total or partial assignment of assets to particular creditors or third parties, those who assume the obligation to pay, on behalf of the debtor, all or part of the unpaid credits shall also acquire, by said assignment, the insolvency actions of unenforceability and nullity that correspond to them.

The assignees, unless agreed otherwise, shall be exempt from liability for the credits of creditors who, being obligated to formalize, did not submit their verification in a timely manner or before the formulation of the proposal.

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Presupposition A debtor who, under this law, is in a situation of current or imminent insufficient assets (insuficiencia patrimonial), before or during the processing of an insolvency proceeding, may enter into an extrajudicial agreement with its creditors. Such agreements may include non-creditor third parties, when they participate in the adopted solutions.

Execution and formalities The agreement shall be in writing, with the signatures of those who execute it duly authenticated or certified. Anyone who has not signed it may later express acceptance in a separate document, with their signature authenticated or certified.

Content and binding nature Those who execute the agreement may agree on any lawful content they deem appropriate, provided they do not cause harm to the other creditors. The agreement, unless otherwise agreed, shall be binding on the signatories, with respect to the benefits they grant to the debtor, even if not judicially homologated. It shall bind the rest of the creditors only if it is homologated by the insolvency court.

Application for judicial homologation The application for homologation must be made by the debtor or its representative with sufficient authority to manage a judicial insolvency proceeding.

It must meet the requirements established in this law for the application for commencement of the insolvency proceeding, when it has not yet been made. In addition, it must attach the original agreement and indicate the amount and percentage of the concurrent credits of the creditors who have executed it, which may not be less than those required for the adoption of a judicial insolvency agreement (acuerdo concursal judicial).

The provisions of this law for a defective insolvency application and notice to creditors shall be applicable to the application for judicial homologation made without an existing insolvency proceeding. The obligation of notice shall also extend to non-creditor third parties who have executed the agreement.

Processing and expiration of the application filed before the commencement of the insolvency proceeding The filing of the application for homologation, before the declaration of commencement of the insolvency proceeding, shall suspend any prior petition aimed at the judicial insolvency of the debtor. All interested parties shall be summoned for fifteen days, by publication of an edict that must be made once, in one of the three daily national circulation media that the court shall indicate to the applicant.

The provisions for the obligation to give notice to those included in the list of creditors shall apply, in the terms provided for the insolvency application filed by the debtor.

From the filing of the application, even ex officio, the court may order the protective measures (medidas cautelares) it deems necessary to safeguard the potential effectiveness of the agreement submitted for homologation.

The debtor's application filed prior to the commencement of its judicial insolvency proceeding shall expire when it unjustifiably fails to activate its processing and progress, being obligated to do so, for a period exceeding fifteen days.

Effects of the resolution granting leave to proceed on the application for homologation filed before the declaration of commencement of the insolvency proceeding The resolution granting leave to proceed on the petition for homologation, filed prior to the declaration of commencement of the insolvency proceeding, shall produce the following effects:

1)The debtor must request judicial authorization to dispose of, in any manner, real property outside the ordinary course of business, or if it intends to dispose of assets of any nature that are indispensable for its business activity. If the agreement contains a partial or total assignment of assets, it may not carry out any act of disposition with respect to them. If the commencement of the insolvency proceeding is subsequently declared, the ineffectiveness of acts carried out without the indicated judicial authorization may be requested, when they have caused harm.
2)The suspension of pending judicial and extrajudicial actions, as well as the impossibility of initiating others, regarding the collection of monetary obligations directed against the debtor's estate, in the same terms provided for the commencement of an insolvency proceeding.

Processing of the application after the commencement of the insolvency proceeding When the application for homologation is filed in an open insolvency proceeding and meets the respective requirements, it shall be disclosed to those who have appeared in the proceeding for a period of ten days, provided that the summons for third parties and interested parties to assert their rights has elapsed and the notice of the petition has been given to the non-creditor third-party signatories of the agreement. Its processing shall not suspend the course of the proceeding.

Objection Non-signatory creditors to whom it causes harm may, within the summons period, object to the homologation of the agreement. The objection may only be based on:

1)The legal or material impossibility of the agreement.
2)The falsity of signatures of the signatory creditors or the lack of capacity or representation of those who signed on their behalf, when it affects the majorities of votes necessary for its adoption.
3)The breach of the insolvency principle of equal treatment with respect to its credit or the preferences recognized by law.
4)Material concealment of assets.
5)Material exaggeration of liabilities.
6)Any other willful or fraudulent maneuver carried out, which was determinant for its obtainment.

Also, third-party signatories who allege the falsity of their signature or that of their representatives, as well as the lack of capacity or representation of those who signed on their behalf, may object.

Objections shall be processed by way of an incidental proceeding (vía incidental). They shall be rejected outright when they lack reasoning or are manifestly improper, as well as those that omit the offering of evidence when it is necessary.

If any objection is admitted or the total homologation of the agreement is denied ex officio, the commencement of the judicial insolvency proceeding shall be declared immediately.

Judicial homologation and effects A homologated extrajudicial agreement shall produce the effects provided for the approval of a judicial insolvency agreement. In no case shall an agreement that seeks to affect the guarantees of privileged creditors without their consent be homologated.

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Effectiveness of the agreement The judicial or extrajudicial agreement shall be executed upon the finality (firmeza) of its homologation. The court, even ex officio, shall order the executory measures that are necessary.

Prior to finality, the effects derived from the commencement of the insolvency proceeding shall be maintained, if it has been decreed, without prejudice to the protective measures adopted or those ordered to safeguard the effectiveness of the insolvency agreement.

Persons affected by the agreement The final homologated agreement shall affect the debtor and all creditors prior to the resolution commencing the insolvency proceeding or the application for homologation of an extrajudicial agreement, as applicable, with the exceptions and in the terms resulting from this law.

However, creditors shall retain against jointly obligated parties, guarantors, and sureties (obligados solidarios, fiadores y avalistas) the corresponding actions for the entirety of their credits, unless the agreement provides otherwise.

Extinctive and novating effects of the agreement By virtue of the agreement, the actions of the creditors for the portion of their credits that have been remitted are extinguished, even if the debtor's financial situation improves or there is any remainder from the insolvency assets, unless an express agreement to the contrary has been made.

With respect to the credits included in the agreement, the debt reductions, grace periods, novations, and other stipulations it provides shall take effect.

Modification of the agreement When, due to supervening events or circumstances, it is not possible to execute the agreements in the terms provided, any interested party may propose their modification, for which a creditors' meeting shall be convened immediately to consider the new proposal. The application for modification must be made with due reasoning and the provision of necessary evidence; otherwise, it shall be rejected outright. It must be filed within fifteen days following the events supporting the application. Modification shall proceed if the majorities necessary for the approval of the current agreement are obtained.

For the processing, consideration, and decision on the proposed modifications, the general regime for proposals to resolve the insolvency crisis and the ordinary procedure for creditors' meetings shall be applied, as appropriate.

The regime of extrajudicial insolvency agreements shall apply when the modification is submitted by a private agreement of the debtor with the majority necessary for its approval.

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Reports on compliance Upon finality of the homologation of an agreement, the debtor or those responsible for executing it must submit quarterly reports regarding the status of its compliance.

The reports may be consulted by intervening parties with a legitimate interest, without the need for a judicial resolution to disclose them.

Full compliance Once the agreement has been fully complied with, the debtor or those responsible for its execution must inform the court and provide the necessary proof to evidence it. They may request the conclusion of the insolvency proceeding. The application shall be processed by way of the insolvency proceeding incident. If the petition is granted, when appropriate, the court shall declare the insolvency proceeding concluded.

Resolution of the agreement for non-compliance In the event of a material breach of the insolvency agreement, any interested party may seek its resolution before the court, for which it must provide the evidence it deems appropriate.

If, at the time the application is filed, a petition to modify the homologated agreement is pending resolution, the action for resolution shall be held in reserve and shall only be processed if the proposed modification is denied by a final resolution.

The admissible application shall be processed by way of the insolvency proceeding incident. During its processing, the protective measures indispensable to securing the interests of the insolvency proceeding may be ordered. Those adopted shall cease to have effect once the resolution granting or rejecting the application is declared final.

The action shall expire at three months, counted from the moment its proponent became aware of or should have become aware of the facts motivating it.

If the petition is granted, the agreement shall be declared resolved and its effects shall cease. Only rights acquired by third parties in good faith by virtue of its partial execution shall retain effectiveness. Once the resolution is final, the liquidation of the estate (masa activa) shall be ordered in accordance with the provisions of this law.

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Ex officio or at the request of any legitimate interested party, the court shall declare the nullity of the homologated insolvency agreement, if it is proven that the liabilities were willfully exaggerated or that some material part of the assets was removed or concealed. In addition, it shall proceed when willful or fraudulent maneuvers that were determinant for its obtainment were incurred. The application shall not be admitted when based on facts that could have been alleged before homologation.

The action shall be processed by way of an incidental proceeding and shall expire at three months from the moment its proponent became aware of or should have become aware of the facts motivating it. In any case, it must be filed within one year of the finality of the resolution that deemed the agreement complied with.

Upon granting the nullity, the liquidation of the estate shall be ordered in accordance with the provisions of this law and the effects of the annulled agreement shall cease. Only rights acquired by third parties in good faith by virtue of its partial execution shall retain effectiveness.

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SECTION VIII

LIQUIDATION AND PAYMENT

Commencement of liquidation The insolvency estate shall be liquidated when:

1)The debtor so requests jointly with its petition for commencement of the insolvency proceeding or when required to fulfill the corresponding requirements because it has been sued.
2)The creditors' meeting rejects all proposals for resolving the financial crisis that have been submitted to a vote.
3)The homologation of a creditors' meeting agreement consisting of the liquidation of the insolvency estate is approved, in which case it shall proceed in accordance with what was agreed and, supplementarily, the provisions of this section shall apply.
4)The court denies, with finality, the homologation of all judicial insolvency agreements that do not entail liquidation.
5)The resolution for non-compliance or the nullity of a judicial or extrajudicial agreement is declared final.
6)The judicial or extrajudicial agreement is modified at the creditors' meeting in such a way that liquidation is agreed upon.
7)The material or legal impossibility of complying with the homologated judicial or extrajudicial agreement is proven, provided its modification is not appropriate. To prove the impossibility, the application shall be processed by way of an incidental proceeding. Within the hearing period of the incident, any legitimate interested party may request the modification or substitution of the agreement for another.
8)A public entity legally responsible for the supervision or regulation of companies under its oversight so requests, in the cases provided for by the special legislation that regulates them, for which it must present the final agreement determining the financial unviability of the company, which motivates the request for the commencement of the insolvent liquidation proceeding.

The commencement of liquidation shall be published in the same manner provided for the commencement of the judicial insolvency proceeding.

Assumption of liquidation functions Whoever is acting as insolvency supervisor or administrator shall assume the functions of liquidator, unless, for qualified reasons, the court orders a new appointment.

For the liquidation, the support of insolvency auxiliaries (auxiliares concursales) may be required, in the manner provided by this law.

Effects of the commencement of liquidation The commencement of liquidation shall immediately produce the following effects:

1)The suspension of the exercise of the debtor's administration and representation powers, who shall be barred from the legal standing to dispose of the insolvency assets and bind the insolvency estate.
2)The dissolution of the insolvent legal entity.
3)The removal of the debtor's administrators and representatives, who shall be replaced by the insolvency liquidator. However, the representatives who are removed may participate in the insolvency proceeding during the liquidation phase.
4)The early maturity of credits predating the judicial declaration of insolvency.
5)The early termination of contracts predating the declaration of insolvency that have outstanding obligations remaining to be performed by the debtor.

At the request of the interested party, by way of an incidental proceeding, the insolvency court may fix the corresponding indemnities for the early contractual termination, which shall be considered as ordinary insolvency credits.

6)Other effects that other laws provide for specific legal relationships, in cases of declaration of bankruptcy or insolvency of the debtor.

The liquidation shall commence and be executed immediately, even if the judicial resolution ordering it is not final.

Effects of the commencement of liquidation regarding credits with special privilege When the liquidation does not consist of the sale of the business as a going concern or as an inactive entity, creditors with special privilege may enforce their guarantees outside the proceeding.

If they proceed in this manner, they shall so inform the court to avoid the liquidation of the encumbered assets in the insolvency proceeding. They may be sold directly or auctioned in the insolvency liquidation, as long as the privileged creditor has not initiated a separate enforcement proceeding. In any case, the basis for the auction or sale shall be the insolvency appraisal of the assets and it shall be carried out free of encumbrances.

If deemed advisable, the assets that are encumbered may be excluded from the sale of the business as a going concern or as an inactive entity, or the privileged creditors may be paid with liquid assets of the insolvency proceeding or funds provided by third parties. In this latter case, the paying third parties shall be subrogated to the creditor's rights.

Order of priority for disposition The liquidation of the insolvency estate shall be carried out, if possible, in accordance with the following order:

1)The business or productive units as a going concern.
2)The business as a whole, when its activity has not continued.
3)The independent productive units, if the business could not be sold as a whole.
4)Groups of assets.
5)Individually considered assets.

When the interests of the insolvency proceeding so require, more than one of the indicated options may be used simultaneously.

Direct sale When this law permits the direct sale of insolvency assets, or the court so orders, the liquidator shall sell them directly, free of encumbrances, charges, and obligations, with immediate payment by the buyer or acquirer, for a price not less than the value accepted in the proceeding.

If the liquidator reports, within a period of thirty days, that the sale of assets for the indicated price was not possible, the court shall decide as appropriate, in accordance with the circumstances, in order to complete the liquidation.

In any case, the liquidator shall be obligated to document the sales it carries out, within the five days following their completion. It shall certify the buyer, the price, and the form of payment. The amount accrued from the sale shall be deposited into the judicial account assigned to the insolvency proceeding within the indicated period.

Duration From the notification of the resolution ordering the liquidation of the insolvency assets, the liquidator must complete this activity within a maximum period of six months.

Exceptionally, the indicated period may be extended only once, for justified reasons at the court's discretion, provided the application is submitted before its expiration. The extension may not exceed six months, counted from the day following the expiration of the original period.

When the liquidation period or its extension has expired and the liquidator has not completed the function, the court shall order the most expeditious manner to conclude the realization of the assets.

Insolvency agreement (acuerdo concursal) in the liquidation stage Even in the liquidation phase, proposals for an insolvency agreement (acuerdo concursal) shall be admitted from the debtor (concursado), the liquidator, the creditors, or third parties.

The proposals shall not suspend the liquidation activity or the period to carry it out, which shall be rendered ineffective only if a firm homologation of a specific agreement that contradicts it occurs. However, in qualified cases, considering the interest of the insolvency proceeding (concurso), the court may order the partial or total suspension of the liquidation.

To the extent applicable, the rules provided in this law for insolvency agreements (acuerdos concursales) shall apply.

Sale modalities The sale of the business (empresa) or productive units (unidades productivas) that are active at the time of their liquidation shall be carried out through public auction or a bidding procedure.

Conditions and publication of the sale proposal The conditions of sale shall be drafted by the insolvency liquidator (liquidador concursal) and approved by the court. The value of the business (empresa) or productive units (unidades productivas) admitted in the proceeding shall serve as the base. In any case, the sale shall be free of encumbrances, liens, and obligations of the debtor (concursado).

It shall be published at least once in two of the media with the largest national circulation, which shall be indicated by the court, and in any other national or foreign media, including technological ones, that is deemed appropriate according to the business (empresa) intended to be sold.

All publications must be made at least ten days in advance of the auction date or the closing of the bidding. They must contain:

1)At least a succinct description of the business (empresa) or productive unit (unidad productiva).
2)The base for bids, which may not be less than the appraisal given.
3)An indication that the balance of the sale shall be payable within the five days immediately following the auction or award, in cash or immediately liquidable securities.
4)The remaining conditions of sale.
5)The manner in which the auction or bidding will be conducted.
6)If necessary, the date and place for its holding.
7)The deadline for the submission of bids in a sealed envelope, if so ordered, with an indication of the procedure for their disclosure.

The notice must establish that, to participate in the bidding or auction, a deposit of twenty percent (20%) of the bid base will be required, which must be credited to the insolvency proceeding (concurso) account before the auction is held or the bidding deadline expires. In the event that the depositor becomes the successful bidder and fails to satisfy the balance of their bid within the five days following the holding of the auction or the award, the deposited sum shall be considered as compensation for damages in favor of the insolvency proceeding (concurso).

Special rules in the case of public auction The sale by public auction may be held at the business's (empresa) premises or the court, as appropriate. It shall be conducted by the insolvency liquidator (liquidador concursal), under the supervision of the insolvency judge. The holding of the auction shall be recorded and documented in the main case file.

Special rules in the case of bidding In the case of sale by bidding, the bids must be submitted to the court, with the name of the bidder, the necessary legal capacity, and their offer. They shall be kept secret until the moment of the scheduled convocation for their disclosure.

The bids submitted shall be disclosed by the insolvency liquidator (liquidador concursal) in the presence of the judge, in the manner, on the date, at the place, and at the time indicated in the publication.

The award must go to the highest bid. In the event of a tie, the liquidator shall call for improved bids among those who have tied, if possible in the same act, when the interested parties are present. If this is not possible, they shall be notified in the most expeditious manner, so that, within three days, they may improve their bid. If the tie persists, a drawing of lots shall be convened as soon as possible to designate the awardee.

A record of the act of disclosure of the bids and the award shall be kept in the main case file.

Bids from cooperatives, associations, or labor corporations (sociedades anónimas laborales) Cooperatives, associations, or labor corporations (sociedades anónimas laborales) of the debtor's (concursada) workers may submit bids for the acquisition of the business (empresa) or productive units (unidades productivas). The proposals may include labor credits as part of the price payment, which must be expressly indicated in the bid.

Payment of the price with labor credits shall not be admissible when the workers do not have control in the formation of the corporate will of the bidders.

The offer made by a cooperative, association, or labor corporation (sociedad anónima laboral) shall have preference over the others in the event of a tie.

Failed sale and new award If the awardee fails to deposit the remainder of the price within the five-day period after the auction or bidding was held, the business (empresa) or the productive unit (unidad productiva) shall be awarded to the person who made the second-best bid, with the first bidder's guarantee remaining in favor of the insolvency proceeding (concurso) as payment for damages. The new acquirer shall be notified of the award so that they may proceed to deposit the remainder of the price within the five-day period.

The guarantee deposits of the participants shall not be returned to them until the sale or award becomes firm.

Failed sale In the event that there are no bidders, a second auction shall be held or the bidding period shall be extended, with a base equal to fifty percent (50%) of the original price.

The second auction shall be held five business days after the first. The period to bid in the second bidding process shall also be five days from the expiration of the original.

The publication of the notice shall indicate at once the conditions, places, as well as the dates or deadlines for holding both auctions or receiving the bids.

If in the second auction or period to receive bids, the going-concern business (empresa en marcha) or productive unit (unidad productiva) cannot be awarded, the liquidator shall choose a public auction or bidding for a lower price that they will propose to the court, according to the circumstances, or the sale of the assets in groups or individually, as regulated by this law, as appropriate for the interests of the insolvency proceeding (concurso).

Under no circumstances shall a bid or auction be approved in favor of an offer that does not cover all credits secured with special privileges and the credits chargeable to the estate (créditos a cargo de la masa) for which those creditors must contribute.

Considering the purposes of the insolvency proceeding (concurso), the liquidator shall request that the court carry out the sale of the inactive business (empresa) or productive units (unidades productivas), through the bidding process, public auction, or direct sale regulated by this law for the liquidation of insolvency assets (activos concursales).

Sale modalities If it is not possible to sell the business (empresa) or productive units (unidades productivas) as a whole, the assets shall be liquidated by groups. Exceptionally, they shall be sold individually, if their nature so requires or when the sale by groups could not be carried out. In each case, the direct sale or public auction regulated by this law shall proceed, as determined by the liquidator, without prior authorization from the court, who must always seek, with their decision, the best economic benefit for the body of creditors.

Conditions and publication of auction sales If the liquidator opts for auction, it shall be held at the place where the assets are located or at the court, as deemed more convenient. Their value admitted in the proceeding shall serve as the base. In any case, the sale shall be free of encumbrances, liens, and obligations of the debtor (concursado).

It shall be published at least once in two of the media with the largest national circulation, which shall be indicated by the court, and in any other national or foreign media, including technological ones deemed appropriate, according to the assets intended to be sold.

All publications shall be made ten days in advance of the first auction. It must contain at least a succinct description of the assets to be auctioned off by groups or separately, their appraisal, the admission of bids only in cash or immediately liquidable commercial securities, the date and place of the auction. It shall be indicated that to participate, interested parties must previously deposit in the insolvency proceeding (concurso) account fifty percent (50%) of the appraisal of the asset or assets for which they wish to bid.

Failed auction and new award If the awardee of an asset or several assets fails to deposit the remainder of the price within five days after the auction or award was held, when necessary, the asset or assets shall be awarded to the person who made the second-best bid, with the first bidder's guarantee remaining in favor of the insolvency proceeding (concurso) as payment for damages. The new acquirer shall be notified of the award so that they may proceed to deposit the remainder of the price within the five-day period.

The guarantee deposits of the participants shall not be returned to them until the sale or award becomes firm. The same rule shall apply in those cases where a person has been awarded assets for a price that is less than the guarantee deposit they made to participate in the auction.

Failed auction If all or some assets could not be auctioned off due to a lack of bidders, a second auction shall be held five business days after the first auction was held, with a base of fifty percent (50%) of the asset appraisal admitted in the proceeding.

The respective notice must indicate at once the place and date of the second auction.

If in the second opportunity there are no bidders for assets or groups thereof, the liquidator shall choose a public auction for a lower price that shall be proposed to the court, according to the circumstances, or the individual sale of the assets as regulated by this law, as appropriate for the interests of the insolvency proceeding (concurso).

For the holding of auctions, bidding processes, and sales provided for in this law, the technological means and procedures that are admitted and regulated by the Supreme Court of Justice may be used.

The direct sale of assets or other forms for the liquidation of the assets may be carried out using technological mechanisms and instruments that are available and most appropriate for the insolvency (concursales) purposes.

Securities and other goods negotiable on exchanges and auctions Credit instruments payable on term or on demand in favor of the debtor (concursado), and those negotiable on stock exchanges, as well as goods commonly traded on specific markets or auctions, shall be traded by the insolvency liquidator (liquidador concursal), according to market prices.

Liquidation or sale of litigious assets Assets or rights whose ownership or availability is subject to litigation may be sold with that character. The acquirer shall assume the risk of the definitive outcome of the proceeding. Procedural succession shall occur in the respective litigation once the acquirer proves their ownership.

Remaining assets from the liquidation If the onerous sale of insolvency assets (activos concursales) is not possible through the mechanisms established in this law, nor the giving-in-payment (dación en pago) to creditors, they shall be returned to the debtor (concursado), or, if they do not wish to accept them, donated to educational or charitable entities.

Prior to their material delivery, any interested party may submit, within five days following the notification of the resolution ordering it, an offer to the liquidator. The creditor making the offer may request the set-off of the proposed sum against the amount owed to them in the insolvency proceeding (concurso). If the partial set-off succeeds and a remainder exists in favor of the insolvency proceeding (concurso), it must be paid within three days following the acceptance of their proposal. If more than one offer is received regarding an asset, the one with the higher amount shall be accepted.

If the debtor (concursado) refuses to receive the assets or the donation becomes impossible, their recycling or disposal shall be ordered at the lowest possible economic cost without harming the environment.

Forms of payment Once the credits chargeable to the estate (créditos a cargo de la masa) have been paid, when applicable, the insolvency creditors (acreedores concursales) shall be paid with the proceeds from the liquidation of the insolvency proceeding's (concurso) patrimony, except in cases where giving-in-payment (dación en pago) is admitted.

The rules of priority among credits and proportionality among creditors of the same class shall apply. Also, the provisions in this law for litigious, conditional, and late credits must be observed.

A reserve shall be made for what corresponds to those admitted creditors for whom immediate payment is not possible.

Partial payments Creditors with special privileges shall be paid immediately when the individual sale of the guaranteeing assets or the sale of the insolvent business (empresa concursada) that includes them has been carried out.

The insolvency liquidator (liquidador concursal) shall make payments to creditors with general privileges every three months, without prejudice to the immediate payment that must be made to maintenance and labor creditors. The period for the first payment shall begin to run from the notification of the resolution that ordered the liquidation.

If the entirety of the credits with general privilege are paid off, payment shall proceed correspondingly to the common credits and, finally, the subordinated ones, with the same periodicity indicated in the preceding paragraph, provided that there is liquidity equal to or greater than five percent (5%) of the value of the credits of one or another class, respectively.

When making partial payments corresponding to a determined class, a reserve must be made for what corresponds to the litigious or conditional credits of that classification.

Giving-in-payment (Dación en pago) If anticipatory payments of credits are admissible or ordered, tangible and intangible assets may be given in payment (dar en pago) in favor of labor creditors, maintenance creditors, or those chargeable to the estate (a cargo de la masa) with an already enforceable right, provided that the anticipatory liquidation of the assets is useful or necessary and their value admitted in the insolvency proceeding (concurso) is less than or equal to the amount of the credit being paid.

Also, assets that could not be sold during the liquidation stage may be the subject of giving-in-payment (dación en pago) in favor of any insolvency creditor (acreedor concursal) or one chargeable to the estate (a cargo de la masa), for the value agreed upon by the interested party and the insolvency liquidator (liquidador concursal).

Remaining balance If a remaining balance exists once all insolvency credits (créditos concursales), including subordinated ones, have been paid, the court shall make its existence known to all interested parties.

Creditors whose credits have been affected by the suspension of interest accrual may liquidate the interest subsequent to the declaration of opening of the insolvency proceeding (concurso), within five days following the notification informing of the remaining balance. The right to collect such interest shall lapse if the interested creditor does not submit the liquidation within the indicated period.

The payment of interest approved by the court, according to this rule, shall be made in accordance with the insolvency (concursales) rules of priority of credits and proportionality of those corresponding to the same class.

The remainder shall be delivered to the debtor (concursado).

Final payment When at any time the liquidator verifies and reports that the liquidation of assets has been completed without the possibility of generating new income in the future, they shall proceed to make the final payment to the corresponding insolvency creditors (acreedores concursales), regardless of the amount to be distributed.

Likewise, once the distribution is made, the insolvency liquidator (liquidador concursal) shall render the final account of their management, in accordance with this law.

In the event that a liquidation insolvency agreement (acuerdo concursal) has been homologated, its execution shall be carried out in accordance with what was conventionally agreed upon.

In matters on which the agreement is silent, the provisions regulated in this section shall apply in a supplementary manner.

SECTION IX

CONCLUSION OF THE INSOLVENCY PROCEEDING (CONCURSO)

Requirements for conclusion The insolvency proceeding (concurso) shall conclude for any of the following reasons:

1)The complete fulfillment of a homologated insolvency agreement (acuerdo concursal).
2)The culmination of the liquidation process and payment to creditors, including the establishment of payment reserves that may have been ordered.
3)Non-existence of insolvency assets (activo concursal).
4)By unanimous extrajudicial agreement, in accordance with special legislation on alternative resolution of patrimonial conflicts, between the debtor (concursado) and all their verified creditors or those appearing in the proceeding, provided it is finalized after the period granted to assert their rights within the insolvency proceeding (concurso) has elapsed.
5)Total payment of what is owed to creditors chargeable to the estate (a cargo de la masa) and verified, litigious, conditional, and late insolvency creditors (concursales).
6)The extinction of all obligations of the insolvency proceeding (concurso), for any cause.

In any case, prior to the conclusion of the insolvency proceeding (concurso), the credits that this law considers chargeable to the estate (a cargo de la masa) must be satisfied.

Procedure In the case of the culmination of the liquidation process and payment to creditors, within the period granted for them to pronounce on the final account rendering of management, legitimate interested parties may prove that ordinary actions for nullity, ineffectiveness, or any other nature, aimed at reintegrating or increasing the patrimonio of the insolvency proceeding (concurso), are pending.

If the non-existence of insolvency assets (activo concursal) is recorded in the initial inventory report and no objections have been presented in this regard, or those formulated have been firmly denied, a period of five days shall be granted to the intervening parties to prove pending actions aimed at the integration of the insolvency assets (activo concursal). If there are none, the insolvency proceeding (concurso) shall be deemed concluded.

The processing of requests based on the other requirements shall be substantiated through the insolvency incident (incidente concursal) procedure.

When a final account of management must be presented, the insolvency proceeding (concurso) shall only be deemed concluded if it is approved or if the obligated party is excused from rendering it, and no pending actions exist that could affect it. However, when the formulation of the final account is not complied with within the period established by law, or the presented account is rejected by a firm resolution, the court shall decree the conclusion of the insolvency proceeding (concurso) if any of the requirements indicated in the previous subsection are met, without prejudice to the administrative, civil, and criminal liabilities that may apply against the non-compliant party.

Publication and effects The conclusion of the insolvency proceeding (concurso) ordered by a firm resolution shall cause its effects to cease.

It shall be published in the same manner as its opening is publicized.

All necessary communications shall be issued. Those that the court cannot process directly shall be managed by the debtor (concursado) or their legal representatives.

Credits chargeable to the insolvency proceeding (concurso) shall be extinguished, except when:

1)The contrary has been provided in a homologated insolvency agreement (acuerdo concursal).
2)A firm condemnatory criminal sentence has been issued against the debtor (concursado) or their representatives for the crimes of fraudulent or negligent insolvency (concurso), or fraudulent insolvency administration.
3)Within five years following the firmness of the conclusion, assets that should have formed part of the insolvency patrimony (patrimonio concursal) appear or are reintegrated.
4)Payment reserves had been made in favor of certain creditors and the respective sums become released subsequently.

In the situations indicated by the last two subsections, unless otherwise provided, the validity of the credits shall be understood to be limited to what may proportionally correspond to them from the assets or money incorporated.

Reopening The reopening of the insolvency proceeding (concurso) shall proceed when there are unpaid insolvency credits (créditos concursales) and the request is based on the appearance or reintegration of assets that should have formed part of the insolvency patrimony (patrimonio concursal) before its conclusion.

The request shall be processed through the incidental procedure. If it is made by the debtor (concursado) or their legal representative, they must give notice to all creditors of the previously concluded insolvency proceeding (concurso) and to subsequent ones, in the same form and with the effects provided for the request to open an insolvency proceeding (proceso concursal).

If the reopening is granted, it shall be published in the same form as the opening of an insolvency proceeding (concurso) is publicized.

The insolvency (concursales) effects shall regain validity, and everything necessary for their effectiveness shall be ordered.

The procedure for verification of liabilities for the debtor's (concursado) creditors prior to the reopening declaration shall apply, as applicable, as well as the determination of the value of the assets integrated into the insolvency proceeding (concurso) for their realization.

Extinction of recognized credits for which a payment reserve had been made Any legitimate interested party may request, through the incidental procedure, the extinction for any cause of the credits admitted in the insolvency proceeding (concurso) for which a reserve for payment had been made. If processed after the insolvency proceeding (concurso) has concluded, its reopening shall not be necessary.

If the petition is granted after the insolvency proceeding (concurso) has concluded, within a period of one month, the insolvency creditors (acreedores concursales) may claim proportional payment from the released sums. Creditors shall only be paid what corresponds to them when they have expressly requested it. The remaining balance, if any, shall be returned to the debtor.

SECTION X

APPELLATE REGIME AND RES JUDICATA

Against resolutions issued in insolvency proceedings (procesos concursales) that are not decrees (providencias), a revocation (revocatoria) appeal shall be admissible, unless otherwise provided by law.

Without prejudice to what is established for special cases expressly provided for by this law, only the resolutions of the first instance insolvency court (juzgado concursal) shall be appealable that:

1)Reject the representation of any of the parties.
2)Decree the suspension or interruption of the proceeding.
3)Rule on the request for granting, modification, substitution, or lifting of a precautionary or protective measure, in national or cross-border insolvencies (concursos).
4)Grant procedural exceptions.
5)Resolve on the consolidation or separation of proceedings.
6)Decide on the intervention of procedural successors or third parties.
7)Decree the nullity of procedural acts.
8)Reject the opening of the insolvency proceeding (concurso) or deny its extension.
9)Put an end to the proceeding or deny its conclusion.
10)Resolve inclusions or objections to the insolvency assets (activo concursal), including their appraisal, provided that the matter in dispute exceeds the amount established for the highest monetary amount of civil proceedings.
11)Decide claims of third parties regarding the assets inventoried or administered in the insolvency proceeding (concurso).
12)Fix or deny fees.
13)Order the removal of the administrator, intervenor, or insolvency liquidator (liquidador concursal).
14)Decide on the continuity, variation, or cessation of the business activity of the debtor (concursado).
15)Order the loss, suspension, or limitation of the powers of the debtor (concursado) or their representatives to administer the assets of the insolvency proceeding (concurso).
16)Decide the request for resolution, continuation, or forced fulfillment of contracts in which the debtor (concursado) participates, when the value of the services exceeds the sum provided for the highest monetary amount of civil proceedings or is incalculable.
17)Rule on the nullity or ineffectiveness against the insolvency proceeding (concurso) of acts and contracts of a lower monetary amount.
18)Decide the maintenance claim chargeable to the estate (a cargo de la masa) and in favor of the debtor (concursado) or the persons to whom the debtor owes maintenance.
19)Rule on the approval or rejection of insolvency solution agreements (acuerdos de solución concursal), as well as their modifications. Only those who expressly opposed the proposal or agreement, in time and form, may challenge the approval. If a meeting was held for the approval, the appellant must have attended it and voted against the proposal.
20)Decide on the nullity, full compliance, forced compliance, or resolution of insolvency agreements (acuerdos concursales).
21)Order the opening of the liquidation phase of the insolvent patrimony (patrimonio concursado).
22)Order, deny, or approve the judicial or extrajudicial sale of insolvency assets (bienes concursados) with a value of the highest monetary amount and that are subject to an insolvency credit (crédito concursal) with special privilege.
23)Resolve on the merits regarding the recognition of insolvency credits (créditos concursales) or those chargeable to the estate (a cargo de la masa) of a lower monetary amount that have been contested.
24)Decide incidents on the extinction, for any cause, of credits admitted within the insolvency proceeding (concurso).
25)Order or deny the payment of insolvency credits (créditos concursales) or those chargeable to the estate (a cargo de la masa).
26)Resolve liquidations of interest of the highest monetary amount, when the law admits their collection within the insolvency proceeding (concurso).
27)Resolve on the joint and several or concurrent patrimonial liability of other persons regarding liabilities of the insolvency proceeding (concurso).
28)Resolve definitively on the account rendering or liability towards the insolvency proceeding (concurso) of administrators, intervenors, or insolvency liquidators (liquidadores concursales).
29)Modify the status of main or secondary proceedings in relation to parallel cross-border insolvencies (concursos transfronterizos).
30)Rule on the reopening of the insolvency proceeding (concurso).

Only the resolutions of the first instance Insolvency Court (Juzgado Concursal) shall admit a cassation appeal (recurso de casación) that:

1)Declare the opening of the insolvency proceeding (concurso) or admit its extension.
2)Rule on the nullity or ineffectiveness against the insolvency proceeding (concurso) of acts and contracts of the highest monetary amount or incalculable value.
3)Rule on the merits regarding the recognition of insolvency credits (créditos concursales) or those chargeable to the estate (a cargo de la masa) of the highest monetary amount that have been contested.

Despite an appeal having been filed or admitted, while it is being resolved, the proceeding shall continue with its first-instance processing.

When the opening of the insolvency proceeding (concurso) is decreed, the filing of the applicable appeals shall not prevent the production of the effects provided for in this law and the immediate execution of the measures agreed as a consequence of the decree.

The superior court, ex officio or at the request of a party, when hearing an appeal, shall take the necessary measures to remedy essential procedural defects.

Procedural or substantive matters resolved with finality in the insolvency proceeding (concurso) shall have the authority of res judicata (cosa juzgada) and shall be indisputable in any other venue, except as provided by law for special cases and without prejudice to the admissibility of a review claim (demanda de revisión) in accordance with civil procedural legislation.

CHAPTER THREE

SPECIAL PROVISIONS

SECTION I

SMALL INSOLVENCY PROCEEDINGS (PEQUEÑOS CONCURSOS)

A small insolvency proceeding (pequeño concurso) shall be considered:

1)That of non-business natural persons (personas físicas no empresarias).
2)That of business persons (personas empresarias), natural or legal, who have no more than ten workers and no more than ten common insolvency creditors (acreedores concursales comunes).

The procedural and substantive regime provided in this law shall apply to small insolvency proceedings (pequeños concursos), as applicable, with the following special rules:

1)The period for the eventual liquidation of the assets shall be three months, extendable for an equal period for qualified reasons at the court's discretion.
2)The remuneration of intervenors, administrators, liquidators, and insolvency auxiliaries (auxiliares concursales) must be at least twenty-five percent (25%) less than that provided for the ordinary insolvency proceeding (proceso concursal ordinario).
3)The other specific cases regulated by this law.

WITH UNLIMITED LIABILITY

SECTION II

ECONOMIC INTEREST GROUPS AND PERSONS

Joint request When two or more natural or legal persons permanently form an economic group, they must jointly submit the request to open the insolvency proceeding (proceso concursal), including all members. The facts on which they base the existence of the grouping and its external manifestation shall be set forth, in addition to fulfilling the requirements established by this law for the initial request. In addition to the patrimonial situation of each of the members, that of the consolidated grouping and the manner in which it is proposed to integrate them into the proposed solution to the patrimonial crisis shall be indicated.

Inclusion of group members in a petition by creditors or other authorized entities In the petition for opening the insolvency proceeding (proceso concursal), filed by creditors or other authorized entities, when other members of an economic group are included, the facts demonstrating the necessary conditions for the formation of the group and the corresponding evidence must be specified.

Cases in which economic interest groups are formed For the purposes of an insolvency proceeding (proceso concursal), the following are considered members of the same economic interest group:

1)The natural or legal person who, under the appearance of acting on behalf of the debtor, has performed acts in their own personal interest and disposed of the assets as if they were their own, to the detriment of creditors.
2)The controlling person of the legal person subject to insolvency proceedings (concursada), when they have improperly diverted the corporate interest of the controlled entity, subjecting it to unified management for the benefit of the controlling person or the economic group of which it forms a part.
3)The legal persons controlled by the insolvent debtor (concursado) or by the persons who, under this law, are considered to be specially related to them, or by their de facto or de jure administrators, when the controlling parties have improperly diverted the interest of the controlled entities, subjecting them to unified management for their benefit or for the benefit of the economic group of which they form a part.
4)Any person with respect to whom there is a commingling of assets (confusión patrimonial) with the insolvent debtor (concursado), which prevents the clear delineation of their assets and liabilities or the majority thereof.

Controlling persons For the purposes of the insolvency proceeding (proceso concursal), the following are considered controlling persons of a group:

1)That person who, directly or through another person that is in turn controlled, holds an interest, under any title, that grants the votes necessary to form the corporate will.
2)Each of the persons who, acting jointly, hold an interest with sufficient votes to form the corporate will and are responsible for improperly diverting the interest of the controlled entity, subjecting it to unified management for the benefit of the controlling person or the economic group of which it forms a part.

Effects of the determination of the group The judgment declaring the existence of an interest group, in accordance with this law, shall determine the extension of the insolvency proceeding (concurso) to its members.

When it is based on commingling of assets (confusión patrimonial), there shall be a single asset and liability estate, and the insolvency proceeding (concurso) shall be considered, for all purposes, as that of a single debtor. If the liquidation of the estate is reached, it shall be carried out in a unified manner, and the proceeds shall be distributed among all insolvency creditors (acreedores concursales), without distinction as to origin.

In other cases, when proposals for resolving the crisis are formulated, they must specify the manner in which each of the group members will participate, with due justification. The insolvency creditors (acreedores concursales) of each one shall have the right to vote on the approval of the proposals that affect them. If liquidation must be carried out, the liquidation corresponding to each group member shall be processed separately, and the assets and credits belonging to each insolvent debtor (concursado) shall also be considered separate. The surplus from each separate estate, after the independent liquidations, shall be combined into a common fund in the original proceeding, which shall be distributed among the creditors not satisfied by the liquidation of the estate in which they participated, subject to the rules of priority and proportionality among creditors of the same class.

All proceedings must have a single comptroller (interventor), administrator (administrador), or liquidator (liquidador), unless, due to the complexity of the activities or another justified cause, the court deems it necessary to appoint specific comptrollers (interventores), administrators (administradores), or liquidators (liquidadores) for a particular group member.

Partners and other persons with unlimited liability Persons with unlimited liability in commercial companies or other legal persons shall be jointly and severally liable with their own assets, within the proceeding, for the liabilities of the insolvent debtor (concursado).

Liability arising from criminal conduct The legal representatives, general or universal attorneys-in-fact of insolvent natural persons (personas físicas concursadas), as well as the directors, administrators, managers, attorneys-in-fact, or liquidators of legal persons declared in insolvency proceedings (concurso), shall also be jointly and severally liable, within the proceeding, when they have been convicted of the crimes of fraudulent or negligent insolvency.

SECTION III

CROSS-BORDER INSOLVENCIES

Scope of application This regulation shall be applicable when:

1)A foreign court or a foreign representative of an insolvency proceeding, regardless of its denomination in another country, requests jurisdictional assistance in Costa Rica in relation to a foreign proceeding.
2)Assistance is requested in a foreign State in relation to an insolvency proceeding (proceso concursal) being processed under Costa Rican insolvency law.
3)A foreign proceeding and a proceeding in Costa Rica are being processed simultaneously, with respect to the same debtor, under Costa Rican insolvency law.
4)Creditors or other interested persons domiciled in a foreign State have an interest in requesting the opening of or participating in an insolvency proceeding (proceso concursal) in Costa Rica, under Costa Rican insolvency law.

This regulation shall not be applicable to state entities and municipalities, in accordance with special Costa Rican law.

Definitions For the purposes of this regulation:

1)"Foreign proceeding" shall mean a collective or insolvency proceeding, whether judicial or administrative, including one of a provisional nature, conducted in a foreign State under a law relating to insolvency or any other type of insolvency proceeding, regardless of the name given to it, by virtue of which the debtor’s assets and businesses are subject to the control or supervision of the foreign court, for the purposes of its reorganization or liquidation.
2)"Foreign main proceeding" shall mean a foreign proceeding conducted in the State where the debtor has the center of its main interests.
3)"Foreign secondary proceeding" shall mean a foreign proceeding, not being a main proceeding, conducted in a State where the debtor has an establishment (establecimiento) or economic activity of any nature.
4)"Foreign representative" shall mean the person or body, including one appointed on a provisional basis, who has been authorized in a foreign proceeding to administer the reorganization or liquidation of the debtor’s assets or businesses, or to act as a representative of the foreign proceeding.
5)"Foreign court" shall mean the judicial or other authority that is competent for the purposes of controlling or supervising a foreign proceeding.
6)"Establishment" (establecimiento) shall mean any place of operations where the debtor carries out a non-transitory economic activity.

Prevalence of the State’s international obligations In the event of a conflict between the provisions of this chapter and an obligation of Costa Rica arising from a treaty or other form of agreement to which it is a party with one or more States, the provisions of that treaty or agreement shall prevail.

Competent court or authority The functions contemplated by this regulation relating to the recognition of foreign proceedings shall be exercised by the Second Chamber of the Supreme Court of Justice (Sala Segunda de la Corte Suprema de Justicia). The other functions concerning the processing of the proceeding after recognition and cooperation with foreign courts shall correspond to the Insolvency Court of San José (Juzgado Concursal de San José).

Nothing in this law shall affect the national provisions relating to the powers and faculties conferred on curators (curadores), comptrollers (interventores), administrators (administradores), or liquidators (liquidadores) appointed in Costa Rican insolvency proceedings (procesos concursales) under national legislation, who may exercise the functions relating to the recognition of foreign proceedings and on matters of cooperation when authorized by the Insolvency Court of San José (Juzgado Concursal de San José).

Actions of national authorities in proceedings of a foreign State The Insolvency Court of San José (Juzgado Concursal de San José), as well as the comptrollers (interventores), curators (curadores), administrators (administradores), or liquidators (liquidadores) appointed in Costa Rican insolvency proceedings (procesos concursales) under national legislation, shall be authorized to act in a foreign State, on behalf of or in the interest of a proceeding opened in Costa Rica, to the extent permitted by applicable foreign law.

Public policy exception Nothing in this regulation shall prevent the court from refusing to take a measure, following the provisions of this chapter, when it is manifestly contrary to national public policy.

Additional assistance under national or international rules Nothing in this regulation shall limit the powers that the Insolvency Court of San José (Juzgado Concursal de San José) may have to provide additional assistance to the foreign representative under any other national or international rule.

Interpretation In interpreting the provisions of this chapter, in addition to the insolvency principles set forth in this law, regard shall be had to its international origin and the need to promote uniformity in its application and the observance of good faith.

Right of direct access Every foreign representative shall have standing to appear directly before Costa Rican courts.

Limited jurisdiction The sole fact of filing a petition before Costa Rican jurisdictional bodies under this regulation by a foreign representative does not imply the submission of the representative or the debtor’s assets and businesses abroad to the jurisdiction of Costa Rican courts for any purpose other than that of the petition.

Petition by the foreign representative to open a proceeding under Costa Rican insolvency law Every foreign representative shall be authorized to request the opening of a proceeding under Costa Rican insolvency law, if they meet the conditions and requirements demanded by it.

Participation of a foreign representative in a proceeding opened under Costa Rican insolvency law From the recognition of a foreign proceeding, its representative may intervene, under the conditions provided by national internal law, in any insolvency proceeding (proceso concursal) in which the debtor is a party, without prejudice to the participation they may have as a party or coadjuvant in other proceedings.

Access of foreign creditors to a proceeding conducted under Costa Rican insolvency law Foreign creditors shall enjoy the same rights as national creditors regarding the opening of a proceeding in Costa Rica and their participation in it, under Costa Rican insolvency law, unless a legal provision establishes otherwise.

This right shall not affect the order of priority of credits in a proceeding opened under Costa Rican insolvency law, but foreign credits may not be assigned a priority lower than that which would correspond to them if they were national creditors.

Communication to creditors abroad under Costa Rican insolvency law Whenever, under Costa Rican insolvency law, notice of any proceeding must be communicated or notified to creditors residing in Costa Rica, it shall also be made to known creditors who do not have an address within the national territory. The court may order that appropriate measures be taken to notify any creditor whose address is not yet known.

Such notifications or communications must be made to each foreign creditor individually, unless the court considers some other form of notification more appropriate, according to the circumstances of the case. No letter rogatory or any other similar formality shall be required to carry them out.

When foreign creditors are to be notified of the opening of a proceeding, the notification must:

1)Specify the deadline for filing verification of claims and indicate the place where such filing must be made.
2)Indicate whether creditors with secured claims need to file verification of those claims.
3)Contain any other information required for such notification, in accordance with the laws of this State and the court’s rulings.

Petition for recognition of a foreign proceeding The foreign representative may petition the Second Chamber of the Supreme Court of Justice (Sala Segunda de la Corte Suprema de Justicia) for recognition of the foreign proceeding in which they have been appointed.

Every petition for recognition must be filed accompanied by:

1)A certified copy of the resolution declaring the foreign proceeding open and appointing its representative; or 2) A certificate issued by the foreign court attesting to the existence of the foreign proceeding and the appointment of its representative; or 3) In the absence of evidence in accordance with the preceding subparagraphs, any other evidence admissible to the Chamber demonstrating the existence of the foreign proceeding and the appointment of the representative.

Every petition for recognition must be filed accompanied by a statement, in which the details of all foreign proceedings opened with respect to the debtor, of which the foreign representative has knowledge, are duly indicated.

The Chamber may require that any document submitted in support of a petition for recognition be translated into the official language of Costa Rica.

Presumptions relating to recognition If the resolution or certificate submitted indicates that it is a foreign proceeding, in accordance with the definition given by this law, and that the foreign representative is a person or body in the sense indicated by the definition given earlier in this section, the court may presume that this is the case.

The court shall be authorized to presume the authenticity of the documents submitted in support of the petition for recognition, whether or not they have been legalized.

Unless there is proof to the contrary, it shall be presumed that the debtor’s registered office or habitual residence, in the case of a natural person, is the center of their main legal interests.

Resolution on recognition of a foreign proceeding Recognition shall be granted to a foreign main or secondary proceeding, as applicable, when:

1)It is a foreign proceeding as defined by this regulation.
2)It is requested by a foreign representative, as defined by this law.
3)The requirements for the petition for recognition of a foreign insolvency proceeding are met.

If the petition meets the respective requirements, the resolution on recognition of a foreign proceeding shall be issued as soon as possible.

Modification or revocation of recognition Through an incidental proceeding, the Second Chamber of the Supreme Court of Justice (Sala Segunda de la Corte Suprema de Justicia) may modify or revoke the recognition, in the event of a showing of the partial or total absence of the grounds on which it was granted, or that those grounds have ceased to exist.

Subsequent information From the time the petition for recognition of a foreign proceeding is filed, its representative shall promptly inform the Chamber or the Insolvency Court of San José (Juzgado Concursal de San José) of the following:

1)Any material change in the status of the recognized foreign proceeding or the appointment of the foreign representative.
2)The existence of another foreign proceeding being conducted with respect to the same debtor, of which they have knowledge.

Measures grantable from the time of filing the petition for recognition of a foreign proceeding From the filing of a petition for recognition until that petition is resolved, the Chamber may, at the request of the foreign representative and when the measures are necessary and urgent to protect the debtor’s assets or the interests of creditors, order provisional measures, including the following:

1)Stay any execution measure against the debtor’s assets.
2)Entrust to the foreign representative or to some other designated person the administration or realization of all or part of the debtor’s assets located in Costa Rican territory, to protect and preserve the value of those that, by their nature or due to concurrent circumstances, are perishable, susceptible to devaluation, or threatened by any other cause.
3)Apply in advance any other measure established for after the recognition of the foreign proceeding.

The measures granted shall become ineffective if the requested recognition is definitively denied. When it is admitted, they shall remain in force until they are replaced by enforcement acts deriving from the recognition.

They may also be modified or lifted if there are changes in circumstances that warrant it.

The Chamber may deny any measure provided for in this article when it affects the development of a foreign main proceeding.

Effects of the recognition of a foreign main proceeding From the recognition of a foreign main proceeding:

1)The initiation or continuation of all individual actions or proceedings being processed with respect to the debtor’s assets, rights, obligations, or liabilities shall be barred, in accordance with this law, as in the case of the opening of an insolvency proceeding (concurso) under national law. The stay (paralización) indicated here shall not affect the right to request the initiation of a proceeding under Costa Rican insolvency law or to file recognition of claims in that proceeding.
2)Likewise, all execution against the debtor’s assets shall be stayed, in accordance with the rules on the opening of an insolvency proceeding (concurso) under national legislation.
3)All right to transfer or encumber the debtor’s assets, or to otherwise dispose of those assets, shall be suspended.

The scope, modification, and termination of the stay (paralización) and suspension effects established by this rule shall be subject to applicable Costa Rican insolvency law.

Measures grantable from the recognition of a foreign proceeding From the recognition of a foreign proceeding, whether main or secondary, if necessary to protect the debtor’s assets or the interests of creditors, the Insolvency Court of San José (Juzgado Concursal de San José), at the request of the foreign representative, may grant any measure absolutely necessary for the purposes of the proceeding, including the following:

1)Bar the initiation or continuation of individual actions or proceedings relating to the debtor’s assets, rights, obligations, or liabilities, even in cases not expressly contemplated by Costa Rican law.
2)Likewise, stay any execution measure against the debtor’s assets, even in cases not expressly contemplated by Costa Rican law.
3)Suspend the exercise of the right to transfer or encumber the debtor’s assets, or to otherwise dispose of those assets, when this has not been done previously.
4)Adopt the necessary measures for obtaining suitable evidence or relevant information regarding the debtor’s assets, businesses, rights, obligations, or liabilities.
5)Entrust to the foreign representative, or to some other person appointed by the court in accordance with the rules of this law relating to insolvency administrators (administradores concursales), the administration or realization of all or part of the debtor’s assets located in Costa Rican territory.
6)Extend any previously granted provisional measure, when required.
7)Grant any other measure that, under national insolvency law, is grantable.

From the recognition of a foreign proceeding, whether main or secondary, the Insolvency Court of San José (Juzgado Concursal de San José), at the request of the foreign representative, may entrust to them or to another person appointed by the court, in accordance with the provisions of this law for insolvency administrators (administradores concursales), the distribution of all or part of the debtor’s assets located in the territory of this State, provided that the court ensures that the interests of creditors in Costa Rica are sufficiently protected.

When granting measures to the representative of a foreign secondary proceeding under this rule, the court must ensure that the measures relate to assets that, in accordance with the law of Costa Rica, are to be administered within the framework of the foreign secondary proceeding or pertain to information required in it.

Adoption of measures and protection of creditors and other interested persons When granting, denying, modifying, or terminating a measure under the provisions of this section, the court must ensure that the interests of creditors and other interested persons, including the debtor, are duly protected.

The court may subject any measure granted to such conditions and guarantees as it deems appropriate.

At the request of the foreign representative or any person affected by a granted measure, or on its own motion, the court may modify or terminate them when they are no longer necessary or useful for the purposes of the proceeding.

Procedure following recognition of the foreign proceeding To safeguard the interests of creditors and third parties residing in Costa Rica, the Insolvency Court of San José (Juzgado Concursal de San José) shall proceed as follows:

1)After recognition, it shall make known to all interested parties the existence of the recognized foreign insolvency proceeding (proceso concursal extranjero), by means of a publication in one of the three most widely circulated national media, which the court shall indicate to the interested party, granting them fifteen days to appear and assert their rights.
2)Creditors residing in the Republic may object to the recognized foreign proceeding being considered the main proceeding, by requesting an order for the opening of an insolvency proceeding (proceso concursal) in Costa Rica, following national law.

They may also request the opening of an insolvency proceeding (proceso concursal) with respect to the debtor’s assets in Costa Rica, which is not considered a main proceeding but rather a secondary one. In any case, if what is claimed by the creditors is appropriate, the provisions for parallel insolvency proceedings shall apply.

Actions to challenge acts harmful to creditors From the recognition of a foreign proceeding, the foreign representative shall have standing to bring actions of an insolvency nature provided for by Costa Rican legislation, for the purpose of preventing or rendering ineffective any act harmful to creditors.

When the foreign proceeding is secondary, the court must ensure that the action only affects assets that, in accordance with national internal law, are to be administered within the framework of the foreign secondary proceeding.

Cooperation and direct communication between a Costa Rican court and foreign courts or representatives The national court shall cooperate, to the extent possible, with foreign courts or foreign representatives processing insolvency proceedings (procesos concursales) or insolvencies in another country.

The court shall be authorized to communicate directly with such courts or representatives, or to request information or direct assistance from them.

Cooperation and direct communication between comptrollers, curators, administrators, or liquidators and foreign courts or representatives In transnational insolvency matters, the comptrollers (interventores), curators (curadores), administrators (administradores), or liquidators (liquidadores) shall cooperate, in the exercise of their functions and under the supervision of the Costa Rican insolvency jurisdictional body, with foreign courts and representatives.

The comptrollers (interventores), curators (curadores), administrators (administradores), or liquidators (liquidadores) shall be authorized, in the exercise of their functions and under the supervision of the court, to communicate directly with the courts or representatives of other countries.

Forms of cooperation The international cooperation required under this section may be implemented by any appropriate means and, in particular, by:

1)The appointment of a person or body to act under the direction of the court.
2)The communication of information by any means the court deems appropriate.
3)The coordination of the administration and supervision of the debtor’s assets and businesses.
4)The approval or application by the courts of agreements relating to the coordination of proceedings.
5)The coordination of proceedings being conducted simultaneously with respect to the same debtor.
6)Any other form that is necessary and suitable for achieving the required result.

Opening of a Costa Rican insolvency proceeding (concurso) after recognition of a foreign main proceeding After recognition of a foreign main proceeding, a proceeding under Costa Rican insolvency law may only be initiated when the debtor has assets in Costa Rica. The effects of this proceeding shall be limited to those assets and, to the extent required for implementing the cooperation and coordination provided for in this section, to other assets of the debtor that, under Costa Rican internal law, must be administered in this proceeding.

Coordination of Costa Rican and foreign insolvencies When a foreign insolvency proceeding (proceso concursal) and a Costa Rican one are being processed simultaneously with respect to the same debtor, the national court shall seek to collaborate and coordinate its actions with those of the foreign court, in accordance with the provisions of the articles on cooperation and communication between authorities and foreign representatives, in the following terms:

1)When the proceeding conducted in Costa Rica is underway at the time the petition for recognition of the foreign proceeding is filed:
i)Any measure granted under this section must be compatible with the proceeding conducted in Costa Rica; and ii) When, upon recognizing the foreign proceeding, it is determined that the proceeding in Costa Rica is the main one, the effects of recognizing the foreign proceeding as main shall not be produced.
2)When the proceeding conducted in Costa Rica is initiated after recognition, or once the petition for recognition of the foreign proceeding has been filed:
i)Any provisional or enforcement measure that was in force by virtue of the recognition of the foreign proceeding or the petition therefor shall be re-examined by the court, which may modify or revoke it if it is incompatible with the national proceeding; and ii) If the foreign proceeding has been recognized as main, the stay (paralización) or suspension of proceedings or enforcement actions ordered may be modified or revoked if it is incompatible with the proceeding opened in Costa Rica.
3)When granting, extending, or modifying a measure granted to a representative of a foreign secondary proceeding, the court must ensure that such measure only affects assets that, under the internal law of this State, must be administered in the foreign secondary proceeding or concerns information required for that proceeding.

Coordination of multiple foreign proceedings When more than one foreign proceeding is conducted with respect to the same debtor, the court shall seek to ensure cooperation and coordination in accordance with this section, and the following rules shall apply:

1)Any measure granted to a representative of a foreign secondary proceeding, once a foreign main proceeding has been recognized, must be compatible with the latter.
2)When a foreign main proceeding is recognized after the recognition, or once the petition for recognition of a foreign secondary proceeding has been filed, any measure that was in force must be re-examined by the court and modified or terminated if incompatible with the foreign main proceeding.
3)When, after a foreign secondary proceeding has been recognized, recognition is granted to another foreign secondary proceeding, the court shall grant, modify, or terminate any measure as appropriate to facilitate the coordination of the proceedings.

Presumption of the existence of a situation of insolvency based on the recognition of a foreign main proceeding Unless there is proof to the contrary, the recognition of a foreign main proceeding shall constitute valid proof that the debtor is insolvent for the purposes of opening a proceeding under Costa Rican insolvency law.

Payment rule for parallel proceedings Without prejudice to the rights of holders of secured claims or rights in rem, a creditor that has received partial collection of its claim in a proceeding conducted in a foreign State, pursuant to a rule relating to bankruptcy or insolvency, may not receive a new dividend on that same claim in an insolvency proceeding (proceso concursal) conducted under Costa Rican law, regarding that same debtor, as long as the dividend received by the other creditors of the same class is proportionally less than the collection already received by the creditor.

Article detail

CHAPTER FOUR

FINAL PROVISIONS

SECTION I

ADDITIONAL PROVISIONS

Without prejudice to mediations freely conducted pursuant to the regulations in force regarding alternative dispute resolution, the Ministry of Economy, Industry and Commerce, and the Ministry of Justice and Peace may establish and authorize the operation of mediation centers specialized in insolvency matters.

They must be in charge of persons with specialized knowledge or extensive experience in this matter. The form of authorization, accreditation, and operation shall be established by the indicated ministries, through the respective regulations.

Article detail

Insolvency proceedings (procesos concursales) shall be the exclusive competence of the courts specialized in this matter, regardless of the nature of the activity carried out or the type of person submitting to the proceeding, such as individuals or legal entities engaged in industrial, professional, commercial, agricultural, sports, technological, and any other private activities, provided they are not expressly excluded by this law.

The Supreme Court of Justice is authorized, when it deems it pertinent and based on workload, to establish the specialized courts necessary for the processing of insolvency proceedings (procesos concursales).

Article detail

Legal norms that refer to administration and reorganization proceedings with judicial intervention or preventive agreements shall be interpreted and applied in relation to those of the insolvency proceeding (concurso), provided by this law before the opening of the liquidation phase, primarily addressing their purpose.

Normative references to bankruptcy, insolvency, and creditor proceedings, contained in precepts not repealed or expressly modified by this law, shall be interpreted and applied in relation to the liquidation phase of the insolvency proceeding (concurso) regulated by this law, primarily addressing their purpose.

When the terms bankruptcy (quiebra) or insolvency (insolvencia) are used, without a specific link to a liquidating insolvency proceeding, they shall be interpreted according to their context and purpose, harmonizing them with the substantive legislation in which they have been included and in relation to this law, as applicable.

Article detail

SECTION II

REPEALS

The following are repealed:

Repeals of the Civil Code The following articles are repealed from Law 63, Civil Code, of September 28, 1887: 884 through 980 and 985 through 1000.

Repeals of the Commercial Code Articles 16 and 851 through 967 are repealed from Law 3284, Commercial Code, of April 30, 1964.

Repeals of the Civil Procedure Code

Article detail

Title V of Book Three of Law 7130, Civil Procedure Code, of August 16, 1989, articles 709 through 818, is repealed.

SECTION III

AMENDMENTS

Amendments to Articles of the Civil Code Articles 417, second paragraph; 466, subsection 3; 560; 777, subsection 1; 790, subsection 5; 824; 1073; 1149; 1150, first paragraph; 1239, first paragraph; 1244, first paragraph; 1278, subsection 6; and 1291, subsection 7 of Law 63, Civil Code, of September 28, 1887, are amended. The texts are as follows:

If the property is sold in an insolvency proceeding (proceso concursal) or through execution by the first-ranking mortgage creditor, the purchaser shall receive it free of encumbrance.

(...).

(...)

The executor shall also cover the alimony payments that, if necessary and while the estate is not in an insolvency proceeding (concurso), must be given to the heirs and the spouse of the deceased according to the judicial order setting the amount of such payments.

1- When the opening of the liquidation phase of its estate has been declared in an insolvency proceeding (proceso concursal).

(...)

5- In favor of the one who pays a creditor in full, after the debtor's insolvency proceeding (concurso) has been declared.

(...).

(...)

6- By the opening of the insolvent liquidation (liquidación concursal) phase of the principal or the agent, or when in a proceeding of this nature they have been separated from the administration of their assets.

(.)

7- Those who, in an insolvency proceeding (proceso concursal), are in the liquidation stage or who have been separated from the administration of their assets.

Articles 8, subsection b); 56, subsection c); 63, first paragraph; 101; 235, subsections j) and k); 265, first paragraph; 271; 278; 531; 608, subsection c); 766, subsections b) and c); 776, seventh paragraph; 830, second paragraph; and 833, all of Law 3284, Commercial Code, of April 30, 1964, are amended. The texts are as follows:

(...)

b)Those who are subject to an insolvency proceeding (concurso), when the opening of the liquidation phase has been ordered or they have been separated from the administration of their assets.

(...)

c)Opening of its liquidation in an insolvency proceeding (proceso concursal); (...)

(.).

The declaration of an insolvency proceeding (concurso) of the company does not entail that of its partners, except in cases regulated in insolvency legislation. In cases of joint and several personal liability contemplated in this chapter, proceedings shall be in accordance with the provisions of insolvency legislation.

(...)

j)The declaration of opening of an insolvency proceeding (proceso concursal) of a merchant or a company, as well as its conclusion; k) The appointment of intervenors, administrators, or insolvency liquidators of merchants or companies; and (...)

Nor may the communication, delivery, or general recognition of the books, correspondence, and other papers and documents be ordered, except in the case of insolvency proceedings (procesos concursales) or liquidation. Outside these cases, the exhibition of books and documents may only be ordered by a competent judicial authority, at the request of a legitimate party or ex officio, when the person to whom they belong has an interest or responsibility in the matter or question being litigated.

(...)

In the event of liquidation, the liquidators must keep them for the indicated period of four years and, in the case of insolvency proceedings (procesos concursales), whoever exercises administration shall keep them, in accordance with the provisions of insolvency legislation. In all these cases, the holders of the books and vouchers are obliged to exhibit them in the same manner as the original owner, under penalty of compensating damages, if they refuse to do so.

If the agent has not committed to advance funds, the commission shall not be carried out as long as the principal does not supply the necessary sum. The same shall occur when the funds supplied by the principal have been exhausted. If the agent has obliged itself to advance funds, it must do so, except in the case of the opening of an insolvency proceeding (proceso concursal) or notorious suspension of payments by the principal.

(...)

c)The opening of the liquidation stage in an insolvency proceeding (proceso concursal) of either of them; and (.)

(...)

b)In cases of opening of the liquidating phase of the insolvency proceeding (concurso) of the drawee, whether accepting or not, or of the seizure of its assets with a negative result; and c) In cases of opening of the liquidating phase of the insolvency proceeding (concurso) of the drawer of a bill not subject to acceptance.

(...)

(.)

In the event of the opening of the insolvent liquidation (liquidación concursal) phase of the drawee, whether or not it has accepted the bill, as well as in the event of the declared insolvent liquidation (liquidación concursal) of the drawer of a bill not subject to acceptance, the presentation of the corresponding judicial resolution shall be sufficient for the bearer to exercise its actions.

(...)

Failure to present on time shall release only the endorsers from liability. If, after the presentment period has expired, the bank enters into a state of liquidation, the holder shall have no recourse against the drawer who, when issuing the check, had funds with the bank, and its action shall only be against the administrative liquidation of the latter; however, the drawer's liability shall subsist if, after issuing the check, it had disposed of the funds with which it could have been covered.

(...)

The bank shall incur liability if it acts contrary to what is ordered in this article.

Amendments to the Civil Procedure Code Subsections 157.3 and 157.4 of Article 157 of Law 9342, Civil Procedure Code, of February 3, 2016, are amended. The texts are as follows:

157.3. Auction base price The sum agreed upon by the parties shall serve as the base price for the auction. In the absence of an agreement, at the election of the executing party, the base price shall be the amount determined by expert appraisal or the registered value, when the assets have an assigned tax or fiscal value updated within the last two years. In all other cases, an appraisal shall be conducted, which shall be carried out by experts from the official list, except in cases of absolute or relative insolvency. If the assets to be auctioned bear encumbrances, the base price shall always be that established for the matured preferred-priority security. In executions on assets subject to an insolvency proceeding (concurso), the base price shall be determined in accordance with the provisions of insolvency legislation.

157.4. Auction order and notifications If the request is proper, the court shall order the auction and indicate the asset to be auctioned, the base prices, and the time and date of the three auctions.

If the asset is sold in an insolvency proceeding (concurso), or through a first-ranking execution, the auction shall be ordered free of encumbrances. If the sale is through execution by a lower-ranking creditor, it shall be ordered subject to the prior encumbrances with unsatisfied conditions or unexpired terms; but if the prior claims are already due and payable, it shall also be ordered free of encumbrances, and the proceeds shall be applied to the payment of creditors, according to the order of their respective claims.

If the existence of encumbrances or annotations appears from the documentation presented, third-party purchasers, creditors, and annotating parties prior to the seizure or the annotation of the complaint shall be notified, when appropriate, so that they may appear to assert their rights within five days. When any of those persons cannot be found, they may be notified by means of an edict published once in the Judicial Bulletin.

For the auction of assets belonging to an insolvent person (persona concursada), the provisions of insolvency legislation shall apply, and the provisions of this Code shall apply supplementarily.

Amendments to the Labor Code Articles 33 and 488 of Law 2, Labor Code, of August 27, 1943, are amended. The texts are as follows:

In the event of an insolvency proceeding (concurso), liquidation, seizure, succession, or other similar cases, the claims and severance payments corresponding to the workers shall be considered a special privilege and shall enjoy a special-super-priority privilege over all other creditors of the insolvency estate (masa), except for mortgagees, pledgees, and alimony claimants.

In insolvency proceedings (procesos concursales), or in other cases, the debtor, if it is in administration of its assets, or whoever represents or administers them, shall be obliged to pay them within thirty days following the formal recognition that they, the courts of justice, or competent authority make of said claims, or at the moment there are funds, if there are none at all at the expiration of this period.

The jurisdictional body shall order, ex officio or at the request of a party, the annotation of both the complaint and the judgment and the liquidations in the universal proceeding, at the appropriate time.

The body hearing the universal proceeding shall remit to the labor court the proceeds of the liquidation necessary to cover the principal and the established accessories. The plaintiff shall have standing to manage, in the universal proceeding, the liquidation of assets and the transfer of the necessary proceeds to its proceeding, for the satisfaction of the rights within it, or their direct payment, according to the order of preference established by law.

Labor claims shall not bear costs of the insolvency estate (masa), unless the liquidation proceeds are insufficient to cover them.

Amendment of Article 81 of the General Law of Urban and Suburban Leases Article 81 of Law 7527, General Law of Urban and Suburban Leases, of July 10, 1995, is amended. The text is as follows:

In the event of the lessee's insolvency proceeding (concurso), whoever holds the administration of its assets and its legal representation, within the insolvency proceeding (proceso concursal), shall be responsible for exercising the rights and fulfilling the obligations deriving from the lease contract, without prejudice to the provisions of insolvency legislation regarding the continuity of contracts in which the insolvent party (concursado) participates.

For the assignment to a third party of the lease right to the premises intended for a commercial or industrial establishment, the provisions of Articles 78 and 79 shall apply, regarding the termination of the contract by personal eviction.

The lessor shall have the status of a privileged creditor, in any pending proceeding or action that must be exercised against the lessee or against its insolvency proceeding (concurso).

Amendment of Article 35 of the Law on Copyright and Related Rights Article 35 of Law 6683, Law on Copyright and Related Rights, of October 14, 1982, is amended. The text is as follows:

If the execution of the publishing contract continues in accordance with insolvency legislation, whoever administers the assets of the insolvency proceeding (concurso) shall assume all the obligations of the publisher. However, when proceeding with the sale of copies, it must grant the author the preference to acquire them, in accordance with

Amendments to the Penal Code Section I of Title VIII of Law 4573, Penal Code, of May 4, 1970, is amended, which shall consist of Articles 238, 239, 240, 241, and 242. The texts are as follows:

Fraudulent insolvency (Concurso fraudulento)

SECTION I

CREDITOR PROCEEDINGS (CONCURSOS DE ACREEDORES)

1)Simulating debts, alienations, expenses, losses, or credits.
2)Removing or concealing assets belonging to the estate (masa) or failing to justify their removal or alienation.
3)Granting undue advantages to any creditor.
4)Having removed, destroyed, or falsified, in whole or in part, the books or other accounting documents, or having kept them in such a way as to make the reconstruction of the assets or the movement of business impossible, when obligated to keep them.

Negligent insolvency (Concurso culposo)

Liability of legal representatives

(...).

Fraudulent insolvency administration (Administración fraudulenta concursal)

1)Altering its accounts, the prices or conditions of contracts, the terms and clauses of acts of disposition of assets, and payments made.
2)Simulating operations or contract expenses, in whole or in part.
3)Concealing or retaining funds or other types of assets of the insolvency estate (masa concursal).
4)Using the insolvency estate (patrimonio concursal) abusively or improperly.
5)Granting undue benefits to any creditor.
6)Failing to inform the insolvency court of any conduct set forth in the five preceding subsections, carried out by those who administer the active mass (masa activa), when it has the function of supervising the administration of the insolvent party's (concursado) assets.

Malicious connivance

The same penalty shall apply to the debtor or the persons referred to in Article 240 who conclude an agreement of this kind.

So that from now on, when the term "bankruptcy" (quiebra) appears in the following laws, it shall refer to the insolvency liquidation phase (fase concursal liquidatoria):

- Law 1644, Organic Law of the National Banking System, of September 26, 1953.

- Law 7558, Organic Law of the Central Bank of Costa Rica, of November 3, 1995.

- Law 7983, Worker Protection Law, of February 16, 2000.

- Law 7523, Law of the Private Regime of Supplementary Pensions, of July 7, 1995.

- Law 7732, Securities Market Regulatory Law, of December 17, 1997.

- Law 8653, Insurance Market Regulatory Law, of July 22, 2008.

Amendments to the Law for the Creation of the Guarantee and Deposit Fund and Resolution Mechanisms for Financial Intermediaries Articles 33 and 49 of Law 9816, Law for the Creation of the Guarantee and Deposit Fund and Resolution Mechanisms for Financial Intermediaries, of February 11, 2020, are amended. The texts are as follows:

When it is appropriate to commence a resolution process for supervised financial intermediaries, in accordance with the provisions of the preceding article, the National Council for Supervision of the Financial System (Conassif), following a reasoned report and proposal from the intervenor, shall declare the commencement of the entity's resolution process as established, where applicable, in Article 139 bis of Law 7558, Organic Law of the Central Bank of Costa Rica, of November 3, 1995.

In the resolution process commencement agreement, the Council shall designate the resolution administrator or administrators who shall carry out the entity's resolution activities, under the terms indicated by this law.

With that designation, the corporate and directive bodies of the entity automatically cease their functions.

Likewise, in the same resolution process commencement agreement, Conassif may order the suspension of any payment or delivery obligation arising from contracts for operations with derivative financial instruments entered into by the entity under resolution, for a maximum period of up to two business days after said agreement is firmly approved, in which case the payment or delivery obligations of the entity's counterparties under said contracts shall also be suspended for the same period.

The commencement of a resolution process and the exercise of resolution powers may not trigger legal or contractual set-off rights, except for the set-off of claims indicated in Article 22 above, or constitute an event giving rise to a right for any counterparty of the entity subject to resolution to exercise contractual acceleration or early cancellation rights, provided that the substantive obligations under the contract continue to be met normally and without prejudice to the provisions of Articles 139 and 139 bis of Law 7558, Organic Law of the Central Bank of Costa Rica, for the case of operations with derivative financial instruments.

Articles 139, 139 bis, and 140 of Law 7558, Organic Law of the Central Bank of Costa Rica, of November 3, 1995, are amended. The texts are as follows:

The following provisions shall apply to supervised entities that are in a situation of financial instability or irregularity:

a)In cases of financial instability or irregularity of degree one, the superintendent shall immediately convene the board of directors, the internal auditor, and the manager of the entity to inform them of the situation and shall establish a reasonable period for the entity to correct the situation of financial instability or irregularity. The superintendent may recommend the removal of any official, employee, or director of the entity, giving the reasons for such recommendation.
b)In cases of financial instability or irregularity of degree two, the superintendent shall immediately convene the board of directors, the internal auditor, and the manager of the entity to inform them of the situation and shall order the presentation of a reorganization plan within a reasonable period, which must propose solutions to the problems indicated by the superintendent, with exact dates for the execution of the various actions proposed, so that the Superintendency can adequately monitor the plan. The plan must be submitted for the superintendent's approval, and once approved by the superintendent, it shall be mandatorily binding for the entity.
c)In cases of financial instability or irregularity of degree three, the Board of Directors shall order, by reasoned resolution, the intervention of the supervised entity and shall designate the intervenors who will assume the entity's administration, who may be officials of the Superintendency itself or other persons designated for that purpose.

According to the seriousness of the facts, at the exclusive discretion of the Board of Directors, it shall set the period for the intervention and may immediately order the taking of possession of the intervened entity's assets, in order to administer them in the manner that best serves the interests of the establishment and its savers and investors.

The intervenors designated by the Board of Directors shall have, in the manner it provides, the judicial and extrajudicial representation of the intervened entity, with the same powers held by the previous administrators and directive bodies. They must present a financial regularization plan for the entity, within the period set by the Board of Directors. This plan, once approved by the Board of Directors, shall be mandatorily binding.

When approving the financial regularization plan, or even before, if for reasons of urgency the Board of Directors so agrees, it may:

a)Prohibit, in whole or in part, the subscription of new credit operations or the granting of extensions for expired operations.
b)Convene meetings of shareholders or associates and propose capital increases in the entity, to guarantee its financial recovery.
c)Order the suspension or limitation of payment of the entity’s obligations. During the intervention period, no attachment (embargo) may be decreed or executed against the assets of the intervened entity that are securing obligations whose payment has been suspended or limited, without prejudice to the provisions of Article 139 bis of this law regarding transactions with derivative financial instruments.
d)Restrict or prohibit the distribution of profits or surplus, except with prior authorization from the Superintendency.
e)Order the reorganization of the intervened entity, including the temporary or permanent removal of any official or employee.

For financial entities supervised by the Superintendencia General de Entidades Financieras (Sugef) that reach a financial situation of instability or irregularity of degree three, as defined in subparagraph c) of Article 139 above, and where the Consejo Nacional de Supervisión del Sistema Financiero (Conassif) orders their intervention, only the provisions set forth in this article regarding intervention, regularization, and resolution shall apply.

The Conassif may order, immediately after decreeing the intervention, the taking of possession of the assets of the intervened entity, in order to administer them in the manner most conducive to the interests of the institution and its savers and investors.

The intervener (interventor) appointed by the Council, within a period of thirty calendar days following the intervention order, must submit to the Conassif a report on the situation of the intervened entity and recommend a regularization plan if viability is deemed possible, or the resolution mechanism to be used in the event of non-viability. In cases where, due to their complexity, the analysis requires more time, the Council may grant an additional thirty calendar days to receive the intervener’s recommendation.

If the Council approves the regularization plan for the financial entity, it shall be mandatory for the financial intermediary. Upon approving this plan, or even earlier if the Conassif so agrees for reasons of urgency, the Council may:

a)Prohibit, wholly or partially, the entering into of new credit operations or the granting of extensions on expired operations.
b)Convene shareholders’ or associates’ meetings and propose capital increases for the entity, in those cases where internal recapitalization is a possibility.
c)Order the suspension or limitation of payment of the entity’s obligations. During the resolution period, no attachment may be decreed or executed against the assets of the entity in this proceeding that are securing obligations whose payment has been suspended or limited, without prejudice to the provisions set forth later in this article regarding transactions with derivative financial instruments.
d)Restrict or prohibit the distribution of profits or surplus, except with the intervener’s authorization.
e)Order, when applicable, the reorganization of the intervened entity, including the temporary or permanent removal of any official or employee.
f)Order the entity to appoint the administrators who will execute the regularization plan. Upon the effectiveness of these appointments, the intervener shall cease in their functions.
g)The intervener’s remuneration shall be set by the Council and shall be charged to the resources of the intervened entity.
h)Upon concluding their function, the intervener must submit to the Council a detailed report of their management, including an itemized detail of the expenses incurred.

In the event that the Council approves resolution, the provisions of the Ley de Creación del Fondo de Garantía de Depósitos y de Mecanismos de Resolución de Entidades Financieras de los Intermediarios Financieros, subject to Sugef supervision, shall apply.

1)The resolution process shall be governed by the following rules:
i)The act ordering it shall be subject to an appeal for reconsideration or revocation (recurso de reconsideración o revocatoria) before the Council within the five business days following its notification, but shall be effective from the moment it is issued. The decision on the reconsideration appeal, or the initial resolution if the appeal was not filed in a timely and proper manner, shall exhaust administrative remedies. Against the act ordering the resolution of a supervised entity, the suspension of its effects in judicial proceedings shall not be available.
ii)The judicial and extrajudicial representation of the entity, in the manner agreed upon by the Council, shall be accredited by publication of the respective agreement in the official gazette. Furthermore, the Council shall order immediate notice to the Mercantile Registry so that, on its own motion, it makes the corresponding registry entries.
iii)While in a state of resolution, no asset of the entity in the process may be attached or sold at auction by a third party; nor may any insolvency proceeding (procedimiento concursal) be declared against it, without prejudice to the provisions set forth later in this article regarding transactions with derivative financial instruments.
iv)The resolution may not exceed one year. Thirty calendar days before the expiration of the period for which the resolution was ordered, the Council must decide, after consulting the designated administrators, whether to allow the entity to continue its operations or to request liquidation or bankruptcy (quiebra) from the competent judge.
v)All expenses required by the resolution of a financial entity shall be charged to its assets. The designated administrators must submit to the resolution authority a detailed monthly report of all expenses incurred. Said authority shall review the reasonableness of such expenses and shall have the power to disapprove those it does not consider pertinent; likewise, it shall determine the amount of the administrators’ remuneration, if applicable.

Resolution expenses shall be paid monthly, as the entity’s cash flow permits.

vi)In the event of bankruptcy, resolution expenses that were approved and not yet paid shall be considered chargeable to the bankruptcy estate (masa), in accordance with Articles 886 and 887, second paragraph, of Ley 3284, Código de Comercio, of April 30, 1964. The allowance of such claims shall be the responsibility of the designated administrators.
vii)The resolution authority shall monitor the resolution process and ensure compliance with the agreed conditions; likewise, it may replace the administrator or administrators at any time if it considers that they are not adequately performing their functions.
viii)Supervised entities shall not be subject to administration through judicial resolution or preventive agreements (convenios preventivos), but exclusively to the procedures provided for in this law.

In the case of transactions with derivative financial instruments entered into by any of the supervised entities, on one or more occasions, under a single master agreement regulated by national or foreign law, which are carried out or traded in the over-the-counter market, early termination, voluntary or contractual netting, and settlement shall operate, even once the intervention or resolution proceeding, as applicable, has been declared open. The foregoing shall be possible in accordance with the provisions of the respective contracts, including in such a way that only the amount corresponding to the net balance of the reciprocal obligations agreed under each master agreement may remain outstanding, even if the debts or credits are not liquid and enforceable at the date of declaration of the insolvency proceeding. In such cases, margins and guarantees provided may be enforced for the net amount owed, and such agreements shall be enforceable against insolvency, intervention, or resolution proceedings, as applicable, without prejudice to the rights of the resulting creditor with respect to any unpaid balance.

The intervention referred to in subparagraph c) of Article 139 above and Article 139 bis shall be governed by the following:

a)The resolution ordering it shall be subject to an appeal for reconsideration before the Board of Directors (Consejo Directivo) within the five business days following its notification, but shall be enforceable from the notification to the legal representative of the entity in question. If there is no legal representative to whom to notify the resolution, this shall not be grounds to prevent the intervention from being carried out. The decision on the reconsideration appeal, or the initial resolution if the appeal was not filed in a timely and proper manner, shall exhaust administrative remedies. Against the resolution ordering the intervention of a supervised entity, the suspension of its effects in judicial proceedings shall not be available.
b)The judicial and extrajudicial representation of the entity, in the manner agreed upon by the Board of Directors, shall be accredited by publication of the respective agreement in the official gazette. Furthermore, the Board of Directors shall order immediate notice to the Mercantile Registry so that, on its own motion, it makes the corresponding registry entries.
c)While in a state of intervention, no asset of the intervened entity may be attached or sold at auction; nor may any insolvency proceeding be declared against it, without prejudice to the provisions of Article 139 bis of this law regarding transactions with derivative financial instruments.
d)The intervention may not exceed one year. Thirty calendar days before the expiration of the period for which the intervention was ordered, the Board of Directors must decide, after consulting the designated interveners, whether to allow the entity to continue its operations or to request liquidation or bankruptcy from the competent judge.
e)All expenses required by the intervention of a financial entity shall be charged to its assets. The designated interveners must submit to the superintendent a detailed monthly report of all expenses incurred. The superintendent shall review the reasonableness of such expenses and shall have the power to disapprove those not considered pertinent; likewise, the superintendent shall determine the amount of the interveners’ remuneration, if applicable. Intervention expenses shall be paid monthly, as the entity’s cash flow permits.

In the event of bankruptcy, intervention expenses that were approved and not yet paid shall be considered chargeable to the bankruptcy estate, in accordance with Articles 886 and 887, second paragraph, of the Código de Comercio. The allowance of such claims shall be the responsibility of the designated interveners.

f)The superintendent shall monitor the intervention process and ensure compliance with the intervention conditions agreed upon by the Board of Directors. The latter may, at any time, after consulting the superintendent, replace the intervener or interveners if it considers they are not adequately performing their functions.
g)Entities subject to the oversight of the Superintendencia General de Valores (Sugeval) and the Superintendencia General de Seguros (Sugese), and the entities regulated by the Superintendencia de Pensiones (Supén).

SECTION IV

TRANSITIONAL PROVISIONS AND EFFECTIVE DATE

TRANSITIONAL I- Proceedings in process upon the entry into force of the Ley Concursal de Costa Rica Civil creditors’ composition proceedings (procesos de concurso civil de acreedores), preventive agreements, bankruptcy and administration and reorganization with judicial intervention, commenced before the entry into force of this law, shall continue to be governed by prior legislation.

However, when in a preventive agreement or administration and reorganization with judicial intervention proceeding, under prior legislation, a declaration of bankruptcy or civil creditors’ composition is warranted, the liquidation phase shall be opened and the proceeding shall continue in accordance with the new Ley Concursal de Costa Rica. Whoever served as intervener or insolvency curator (curador concursal) up to that point shall assume the role of insolvency liquidator (liquidador concursal), unless there are justified reasons for making a new appointment.

TRANSITIONAL II- Means of challenging resolutions issued prior to the entry into force of the Ley Concursal de Costa Rica Resolutions issued before the entry into force of this law shall be subject to the remedies provided for by the procedural rules in force at the time of their issuance.

TRANSITIONAL III- Regulation concerning insolvency professionals and auxiliaries Within three months following the entry into force of this law, the Supreme Court of Justice shall issue the Regulation for the selection, designation, and performance of the functions of interveners, administrators, liquidators, and insolvency auxiliaries (auxiliares concursales), as well as the criteria for defining the fees of such professionals. Likewise, within the two months following the enactment of the new regulation, it shall initiate the processes for competitive recruitment and selection of the professionals who will subsequently form the lists of interveners, administrators, liquidators, and insolvency auxiliaries.

TRANSITIONAL IV- Implementation of insolvency accreditation courses and programs The Judicial School shall implement, within one year from the effective date of this law, insolvency accreditation courses for interveners, administrators, liquidators, and insolvency auxiliaries. University entities may submit their insolvency accreditation programs for said professionals to the Judicial School. The Judicial School shall have a period of three months for the respective approval or to indicate to the university entities the modifications or adjustments needed for the equivalence of their programs.

TRANSITIONAL V- Continuity of positions of interveners and insolvency curators appointed under the repealed law The interveners and insolvency curators who are on the respective lists of the Executive Directorate of the Judicial Branch upon the entry into force of this law shall continue on them for a period of two years or for such additional time as necessary until the Judicial Branch has established the new lists of interveners, administrators, liquidators, and insolvency auxiliaries. In any event, in proceedings in which they were previously appointed, they shall continue in their functions until conclusion or until they cease due to another legally established cause.

TRANSITIONAL VI- Regulation of mediation centers specialized in insolvency matters The Executive Branch, through the Ministries of Economy, Industry and Commerce, and of Justice and Peace, shall have a period of one year from the entry into force of this law to regulate matters relating to the accreditation, authorization, and operation of mediation centers specialized in insolvency matters.

TRANSITIONAL VII- Practical rules for the application of the Ley Concursal de Costa Rica The Supreme Court of Justice shall issue, on its own motion or at the proposal of the insolvency courts (tribunales concursales), the practical rules necessary for the application of this law.

This law shall come into force six months after its publication.

Done at the Presidencia de la República, San José, on the fourteenth day of April of the year two thousand twenty-one.

Date of generation: 4/5/2026 17:02:53 Go to beginning of document

Costa Rica Bankruptcy LawLey Concursal de Costa Rica

Artículo 1 — Purpose

Artículo 2 — Unified process and scope of application

Artículo 3 — Principles

Artículo 3 — 1.

Artículo 3 — 2.

Artículo 3 — 3.

Artículo 3 — 4.

Artículo 3 — 5.

Artículo 3 — 6.

Artículo 3 — 7.

Artículo 3 — 8.

Artículo 3 — 9.

Artículo 4 — Subjective presuppositions

Artículo 4 — 1.

Artículo 4 — 2.

Artículo 4 — 3.

Artículo 5 — Objective presuppositions

Artículo 5 — 1.

Artículo 5 — 2.

Artículo 6 — Legal representation (patrocinio letrado) and special procedural benefits

Artículo 7 — Judicial file and notifications

Artículo 7 — 1.

Artículo 7 — 2.

Artículo 8 — Plurality of insolvency petitions against the same debtor

Artículo 8 — 1.

Artículo 8 — 2.

Artículo 9 — Legal costs (costas)

Artículo 9 — 1.

Artículo 9 — 2.

Artículo 10 — Precautionary protection (tutela cautelar)

Artículo 10 — 1.

Artículo 10 — 2.

Artículo 11 — Oppositions

Artículo 12 — Standing (legitimación)

Artículo 13 — Petition by the debtor or by the representatives or administrators of autonomous patrimonies

Artículo 13 — 1.

Artículo 13 — 2.

Artículo 13 — 3.

Artículo 13 — 4.

Artículo 13 — 5.

Artículo 13 — 6 Content of the composition agreement (convenio) proposal

Artículo 13 — 7.

Artículo 13 — 8.

Artículo 13 — 9.

Artículo 13 — 10.

Artículo 14 — Petition by the creditor and other legitimized entities

Artículo 14 — 1.

Artículo 14 — 2.

Artículo 14 — 3.

Artículo 14 — 4.

Artículo 14 — 5.

Artículo 14 — 6.

Artículo 14 — 7.

Artículo 14 — 8.

Artículo 14 — 9.

Artículo 14 — 10.

Artículo 14 — 11.

Artículo 15 — Judgment

Artículo 15 — 1.

Artículo 15 — 2.

Artículo 15 — 3.

Artículo 16 — Immediate Effects

Artículo 17 — Effects on the Insolvent Debtor

Artículo 17 — 1.

Artículo 17 — 2.

Artículo 17 — 3.

Artículo 17 — 4.

Artículo 17 — 5.

Artículo 17 — 6.

Artículo 17 — 7.

Artículo 18 — Effects on Judicial Proceedings and Extrajudicial Actions

Artículo 18 — 1.

Artículo 18 — 2.

Artículo 18 — 3.

Artículo 18 — 4.

Artículo 19 — Effects on Creditors and Their Credits

Artículo 19 — 1.

Artículo 19 — 2.

Artículo 19 — 3.