Insolvency and bankruptcy in Argentina: advice to companies and creditors

Raskovsky y Asociados acts on both sides of a corporate crisis: advising the company that needs to restructure its liabilities and representing creditors seeking recovery within a reorganization or a bankruptcy. The governing statute is Law 24,522, the Argentine Insolvency and Bankruptcy Act.

Most of the value that can be preserved in a crisis is defined before the court filing. By the time a company arrives with overdue deadlines, suppliers cut off and bank accounts attached, the range of alternatives has already closed on its own.

When a reorganization filing makes sense

The concurso preventivo is a restructuring tool, not a declaration of failure. It stays individual enforcement actions, freezes liabilities as at the filing date and opens a formal stage to negotiate with all creditors at once, instead of putting out fires one at a time.

The right moment is usually earlier than the owner believes. The signal is not one month without cash, but a structural gap between what the operation generates and what the debt requires, with no reasonable prospect of reversal. We test that diagnosis with numbers before recommending any course of action, because a filing carries real reputational and operational costs.

What is required to file

Section 11 of Law 24,522 sets out a series of requirements that cannot be improvised: financial statements, a list of creditors with addresses and amounts, details of the accounting books, a list of pending litigation and an explanation of the causes of the crisis. Preparing that documentation properly is the first line of defence of the whole proceeding: an incomplete filing can be rejected, and rejection leaves the company worse off than before.

We work through that stage alongside the company’s accounting team, because the quality of the information determines both the admission of the filing and the credibility of the proposal that will later have to be defended before creditors.

The arrangement with creditors: classes and majorities

Once the proceeding is opened, creditors file their claims and the debtor proposes classes and a payment plan. Court approval requires the majorities of Section 45 of the Insolvency Act, which combine a majority of creditors with a majority of debt within each class. Classification is therefore not a formality: it is the architecture of the negotiation.

A proposal that holds usually combines several elements:

• Realistic payment terms, tied to the cash the business can actually generate
• Haircuts calibrated by class, rather than uniform
• Separate treatment for strategic suppliers the operation needs to keep
• Security or verifiable commitments that make the promise credible

There is also the out-of-court restructuring agreement (APE, Sections 69 to 76 of the Insolvency Act): it is negotiated outside the proceeding, with less exposure, and then submitted for court approval. It is a reasonable alternative where the debt is concentrated in a few creditors willing to talk.

On the creditor side: filing the claim and deciding

For a creditor, someone else’s insolvency raises three successive decisions: filing the claim properly, defending its ranking and preference, and voting for or against the proposal. All three have short deadlines and definitive consequences. A claim filed badly, or filed late, recovers less or nothing at all.

We represent creditors in the proof of claim stage, in objections to third-party claims and in review proceedings, and we advise on whether to accept the proposal, which is an economic assessment before a legal one: what the arrangement offers against what a liquidation would return.

Bankruptcy: the business, the assets and the directors

Once bankruptcy is declared the scenario changes: the debtor is divested of its assets and a court-appointed trustee (síndico) takes over management. It does not necessarily end in immediate liquidation: the statute allows the business to continue operating and the company to be sold as a going concern, which in many cases preserves more value and more jobs than a piecemeal auction.

At this stage we act in:

• Creditor-filed bankruptcy petitions and defence of the debtor
• Conversion of a bankruptcy into a reorganization (Section 90 of the Insolvency Act)
• Avoidance actions over acts performed during the suspect period
• Liability claims against representatives and third parties (Section 173 of the Insolvency Act)
• Employment claims, pronto pago and filing of preferential claims

Directors’ liability deserves a paragraph of its own. In principle personal assets are separate from those of the company, but that separation is not absolute: it can fall away where conduct aggravated the insolvency or diverted assets. This is one of the reasons why every decision taken during a crisis should be documented.

Why choose us in an insolvency scenario

The file is handled by a partner, with direct contact. In insolvency that matters especially: decisions must be made on partial information, against short court deadlines, coordinating in parallel with accountants, trustees, banks and the company’s own team. We also cover the employment and contractual fronts, which in a crisis rarely arrive on their own. We work in English with foreign creditors and shareholders.