Argentina Bankruptcy Law Revisited

1. OVERVIEW The Law applicable to collective execution proceedings in Argentina is Law nº 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"); Workout/Out of Court Judicial Agreement (so called "Acuerdo Preventivo Extrajudicial" or "APE"); and Bankruptcy or Liquidation Proceeding (so called "Quiebra"). The three proceedings referred above comprehend a general principle which is the "Cessation of Payments" (so called "Cesación de Pagos") which means a general inability to pay debts and meet current liabilities with the available assets, as they become due.

2. 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:

   Only the debtor - individual or legal entity, whether local or foreign- may voluntarily seek a Reorganization Proceeding (creditors are not entitled to claim it); Reorganization Proceeding works as a measure to prevent a Bankruptcy or Liquidation Proceeding; 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; 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. Creditors (secured and unsecured) have a bar date to submit a "Proof of Claim" (so called "Verificación de Créditos") before the trustee; Admissible claims by judicial ruling will be counted for voting purposes in connection with a reorganization plan; Debtor is entitled to differentiate voting creditors by categories and creditor groups in the Reorganization Plan (so called "Categorización de Acreedores"); Debtor has an "Exclusivity Period" (so called "Período 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...