Private Restructuring: An Alternative for Creditors and Debtors

Originally published December 2004

There has been some relief for companies suffering under Colombia's largest financial crisis and on the verge of becoming insolvent since the mid-1990s - first under Law 222/1995 and then under Law 550/1999. In both cases creditors and debtors have had to deal with procedural and regulatory issues that obstruct settlement solutions, or impose time constraints on creditors, debtors, employees and shareholders reaching satisfactory restructuring agreements. In other words, legal requirements and procedural steps generally obstruct the parties from using the theoretical benefits implicit in the regulations. To avoid falling into an inconvenient insolvency proceeding, debtors and creditors may wish to follow an out-of-court settlement process that, should it be successful, would form an agreement binding on all parties executing it.