OVERVIEW The Law applicable to collective execution proceedings in Argentina is Law n 24,522 (hereinafter "The Bankruptcy Law").

The Bankruptcy Law does not apply to public entities nor to, pension and social securities funds, insurance companies and financial institutions which are regulated by special regimes. Three insolvency proceedings are set by The Bankruptcy Law: Reorganization Proceeding (so called "Concurso Preventivo"); Bankruptcy or Liquidation Proceeding (so called "Quiebra"). The three proceedings referred above comprehend a general principle which is the "Cessation of Payments" (so called "Cesacin de Pagos") which means a general inability to pay debts and meet current liabilities with the available assets, as they become due. REORGANIZATION PROCEEDING A Reorganization Proceeding is a remedy by which a debtor obtains financial relief through a judicially supervised reorganization proposal made to its creditors. Its main features are the following:

1. Only the debtor - individual or legal entity, whether local or foreign- may voluntarily seek a Reorganization Proceeding (creditors are not entitled to claim it); 2. Reorganization Proceeding works as a measure to prevent a Bankruptcy or Liquidation Proceeding; 3. Management of the legal entity maintains the administration of the debtor's affairs with restrictions and under the supervision of a trustee appointed by Court; 4. The commencement of the Reorganization Proceeding effectively stays claims of unsecured creditors against the debtor arising prior to the filing of the petition and interest on unsecured debts cease to accrue. 5. Admissible claims by judicial ruling will be counted for voting purposes in connection with a reorganization plan; 6. Debtor is entitled to differentiate voting creditors by categories and creditor groups in the Reorganization Plan (so called "Categorizacin de Acreedores"); 7. Debtor has an "Exclusivity Period" (so called "Perodo de Exclusividad") during which the debtor has the exclusive right to submit a proposal for payment to creditors in each category and obtain creditors approval, the same proposal has to be made to each and all creditors within the same category, however different proposals may be made to different categories; 8. Debtor can choose from a wide range of options to include in the plan for payments to creditors, which involves any solution that can be legally implemented such us amortization payments, refinancing, and asset transfers, among others; 9. Debtor has to obtain a majority of the majority of the creditors within each category, representing at least two-third of the outstanding debts within the same category; 10. A Novation of credits that were admitted occur after the Court approves the Reorganization Plan proposed by the debtor grounded on the terms and conditions of such plan; and 11. When debtor is not an individual i.e.: is legal entity such as a corporation, a limited liability company, a cooperative, or a company partially owned by the Federal, Provincial, or Municipal Government and has failed to obtain the necessary approval for its reorganization plan,

bankruptcy is not declared in order to allow any creditor or a third party interested in the purchase of the company to submit their own proposal based on their interest in taking over the company (so called "Cramdown" or "Salvataje"). BANKRUPTCY OR LIQUIDATION PROCEEDING It is a remedy which seeks to either have the debtor's remaining assets liquidated and distributed among the creditors and to thereby discharge the debtor from any further obligation or to restructure and reorganize the insolvent's debt structure. The proceeding could be initiated: 1- upon request of the debtor, 2- by petition of a creditor, or 3following a default or nullification of a plan in a Reorganization Proceeding or Workout/Out of Court Judicial Agreement. Debtor is entitled to convert a Bankruptcy or Liquidation Proceeding into a Reorganization Proceeding. Debtor is divested of its assets which are administered and eventually disposed by the trustee appointed by Court. A "preference or suspect period" (so called "Perodo de Sospecha") is set, extending up to two years prior to the declaration of bankruptcy by the Court where certain actions by the debtor may be voidable or ineffective vis--vis creditors by operation of law, namely acts made for no apparent reason, or when debt is paid before it falls due, among others. Creditors have to file a "Proof of Claim" before the trustee in order to get their credits admitted by Court (such credits, in case of a prior existence of a Reorganization Proceeding must be originated after the start of this latter proceeding and before the Bankruptcy or Liquidation is initiated). The Bankruptcy Law set different ways of liquidating assets in the following order of preference: a- sale as an going concern in case the debtor's is a legal entity, b- sale of assets as a whole in case of close down of debtor's activities, and c- sale of all or some of the assets individually. After the foreclosure is ended, the trustee must prepare a final report including a proposal for the final distribution of the proceeds. The Bankrupcty Law establishes certain privileges/preferences for the payment of creditors with the foreclosure proceeds. COMMON PROVISIONS Trustees and Professionals Trustees in Argentina consist primarily of certified public accountants. The new law creates two lists which include (i) List A, comprised of firms which serve in large, complex reorganizations and liquidations and (ii) List B, comprised of independent professionals who serve in the remaining cases. Other professionals who participate in the Argentine bankruptcy process include: Administrators who serve by judicial appointment and generally have a business degree Creditors' Committees are appointed. Liquidators serve to liquidate the debtor's assets Appraisers calculate the value of the debtor's assets which comprise the bankruptcy estate. Compensation:

1.

2. 3. 4.

5.

6.

7.

The new law has substantially reduced professional compensation in bankruptcy Cases by fifty (50) percent. Procedural Rules The procedural rules have similar universal application through the country. Small Business Reorganizations and Liquidations In order to qualify for special treatment, the debtor must have one of the following characteristics: liabilities totaling less than $100,000; no more than twenty (20) unsecured creditors; or No more than twenty (20) employees. What are Trustees? Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another A Trustee is responsible for managing all of the property owned by a trust for the benefit of the trust beneficiaries. The exact duties of a Trustee will vary based on what assets are owned by the trust. For example, if the trust consists of bank and investment accounts, then the Trustee will be responsible for overseeing these accounts. Or, if the trust owns rental real estate, then the Trustee will be responsible for managing the rental property. What a cramdown scenario means? In the context of a bankruptcy case, a cramdown is a legal term, used to describe a scenario when the Bankruptcy Court reduces the outstanding amount owed on a particular debt to match the current fair market value of the collateral associated with that debt. One example of a cramdown is where a debtor owns an investment property, which currently has a mortgage of $400,000, but the current fair market value for that same property is $100,000.

What are Cartas de Poder? The old law in Argentina provided for a simple document, the "carta poder", which was used in voting for or against plans of reorganization. The new law omits this provision, thereby creating numerous difficulties and increasing costs, particularly in nonjudicial workouts.

Trabajo Prctico De Ingles

Alumno: Franco Dupuy

Profesora: Anglica Rodrguez

Tema: Bankruptcy Law in Argentina

Fecha de Entrega: 09 de Agosto del 2012

Calificacin: