Law No. 18,387, enacted in Uruguay in 2008, regulates bankruptcy and corporate reorganization. Its purpose is to provide a legal framework for restructuring companies facing financial difficulties, allowing for either their continuation or an orderly liquidation. The regulation establishes procedures for negotiating with creditors, preserving a balance between their rights and the company’s viability.
Frequently Asked Questions:
What type of claim do I have if I file against my debtor’s bankruptcy?
There are different categories:
Special privileged claims: those secured by a mortgage or pledge, typically loans granted by the banking system.
General privileged claims: labor claims of any kind, and claims for national or departmental taxes.
Unsecured (chirographic) claims: a residual category; if a claim does not fit into the previous categories, it is classified as unsecured.
Subordinated claims: fines and other pecuniary sanctions of any kind, as well as claims from persons closely related to the debtor.
Whether you are considered a privileged, unsecured, or subordinated creditor depends on the nature of your claim.
What should I do if my debtor is “insolvent”?
Who can request the declaration of bankruptcy: The bankruptcy declaration can be requested by the debtor themselves; any creditor, whether their claim is due or not; any administrators or liquidators of a legal entity; partners personally liable for debts of civil or commercial companies; co-debtors, guarantors, or endorsers of the debtor, among others.
I am a creditor and wish to file for my debtor’s bankruptcy: If the bankruptcy request is not filed by the debtor, applicants must comply with Articles 117 and 118 of the General Code of Procedure and provide evidence supporting the presumption of insolvency. To have the request admitted, certain relative and/or absolute presumptions established in Articles 4 and 5 of the Bankruptcy Law must be met. Withdrawal of the request is not allowed, and applicants are liable for damages if the request is abusive or unfounded. The judge may require a counter-guarantee, except for labor creditors, who are exempt.
If the bankruptcy has already been filed by someone else, what should I do?
You must appear to verify your claim once the competent judge declares the debtor bankrupt. Creditors identified in the debtor’s accounting and documents, as well as known by other means, will be notified of the bankruptcy declaration, the court handling it, their appointment, and the date of the Creditors’ Meeting. Creditors must appear to verify their claims within sixty days from the date of the judicial declaration of bankruptcy.
Trustee and overseer: who are they and what is their role in the bankruptcy process?
Trustee: A judicial assistant appointed by the judge in compulsory and some voluntary bankruptcies. Their main role is to manage and liquidate the company’s assets, ensuring payment to creditors according to the legal priority. They represent the creditors’ interests and must prepare reports on the company’s financial situation. They may recommend either the continuation of the company or its liquidation.
Overseer: Also appointed by the judge in voluntary bankruptcies, when the company files for bankruptcy on its own initiative. Their role is to supervise and monitor the debtor’s management without taking direct control of administration. They ensure the company complies with the obligations of the bankruptcy process and act in defense of creditors’ interests.
Both roles aim to ensure transparency and proper process conduct, protecting the rights of both debtor and creditors.
What is a Private Reorganization Agreement?
It is an out-of-court procedure, meaning the company and its creditors can reach an agreement outlining a payment plan without direct judicial intervention. Consent from the majority of creditors is required according to law—specifically 75% of the unsecured (chirographic) debt with voting rights. Once approved by the judge, the agreement becomes binding for all creditors, including those who did not participate in the negotiation. Its purpose is to reorganize the company, allowing it to restructure its debts and avoid liquidation.
Non-compliance: If the company fails to meet the payments stipulated in the Private Reorganization Agreement (PRA), any affected creditor may request the competent judge to initiate the bankruptcy liquidation process. This means the company loses the opportunity to restructure and must undergo liquidation of its assets to satisfy outstanding debts.
