Argentina: New Amendments to the Argentine Bankruptcy Law

Last Updated: 17 May 2002
Article by Pablo Ferraro-Mila

As of 16 May 2002, Law Nbr. 25,589 (the "New ABL") with amendments to the Argentine Bankruptcy Law Nbr. 24,522, as modified by Law Nbr. 25,563 (the latter of February 2002), has been promulgated and became in force after publication in the local Official Gazette.

The amendments of the New ABL are in line with the negotiations held to date between Argentine and International Monetary Fund officials towards securing new credit lines to activate the country’s economy.

The most important changes introduced by the New ABL are the following:

(i) Exclusivity period. Debt Releases: The New ABL establishes a 90 business days term for the Exclusivity Period, during which the debtor may propose a reorganization plan to its creditors. This Exclusivity Period may be extended for an additional 30 day term. Under Law Nbr. 25,563 passed on February 2002, the Exclusivity Period was of 180 business days, extensible for the same period, and under Law Nbr. 24,522 (passed in 1995 until last February), the Exclusivity Period was of 60 business days, extensible for another 30 days.

With respect to debt releases, it is worth noting that under Law Nbr. 24,522, the debtors’ proposals could not include a principal debt release exceeding 60 per cent of each admitted claim. This cap on permitted debt releases was eliminated by Law Nbr. 25,563 and is held by the New ABL, thus allowing the debtor to offer any debt release with respect to the original debt in the reorganization plan with creditors.

Finally, creditors may not be able to make reorganization offers lower than that made by the debtor during the Exclusivity Period.

(ii) Suspension of Foreclosure Proceedings: Pursuant to the New ABL, the following acts are suspended for a period of 180 consecutive days (formerly, 180 business days under Law Nbr. 25,563), counted as of February 2002 (thus, ending on September 1st, 2002):

  1. foreclosure proceedings (e.g., of mortgages and pledges) over such assets destined to the business or home of the debtor (except for credits derived from (a) alimony, (b) criminal liability, (c) labor claims, (d) tort liability or arising from insurance claims, (f) credits originating after the New ABL, and (g) for the execution of bankruptcy judgments; and
  2. the enforcement of preliminary measures (e.g., attachments) which produce the dispossession of such assets which are needed for the debtor’s commercial activities (under Law Nbr. 25,563, all future and outstanding preliminary measures were suspended).

(iii) Original Debt Guaranty: Under the New ABL, any changes to the original debt agreed between debtor and creditor as a result of the reorganization, do not affect the claims against the guarantors of such debts; thus, regardless of the reorganization outcome, guarantors remain fully liable for the original debts. In this sense, Law Nbr. 25,563 provided for a change to this rule, by which any guarantees were subject to the outcome of the negotiation of the original debts; thus, the New ABL reestablishes the regime under Law Nbr. 24,522 (i.e., guarantors and joint debtors remain fully liable for the whole amount of the original debt).

(iv) Reestablishment of the ‘cram-down’ proceeding (forced capitalization): The New ABL reestablishes the ‘cram-down’ proceeding (special proceeding envisaged to avoid the debtor’s automatic bankruptcy; it is worth noting that the Argentine concept of ‘cram-down’ has not the same meaning as under U.S. Law). Therefore, creditors, the debtor and third parties may propose a debtor’s capital stock acquisition plan in the event the debtor fails to obtain approval of its reorganization plan proposed while the Exclusivity Period is in force. In addition, the bankrupt company valuation system shall be determined by an appraiser appointed by the judge, considering its market value (including intangibles and market positioning), and not only taking into consideration its book value.

It is also worth noting that the New ABL grants broader powers to the reorganization judge by allowing him to approve a reorganization agreement even if the debtor has not obtained the required majorities from its creditors, or reject reorganization agreements if they are abusive for any of the parties. This regime is closer to the U.S. "cram down" proceeding, by which the judge may impose a reorganization agreement against the will of certain creditors.

(v) Control Transfer Foreclosures: The New ABL eliminates the suspension until the end of the emergency period (December 10, 2003), of any foreclosure of guarantees which allowed the transfer of control over reorganized companies or their subsidiaries.

(vi) Bankruptcy Requests. Judicial and Extra judicial Foreclosures: The New ABL eliminates the suspension of (a) judicial and extra judicial foreclosures against reorganized debtors, and (b) bankruptcy request proceedings (which under Law Nbr. 25,563 were suspended for 180 business days).

(vii) Filing of Credit Claims. Voting rights: The New ABL establishes a regime for the filing of credit claims by trustees, and for the voting rights in the case of creditors holders of securities issued in series.

(viii) Debtor's Proposal: If the debtor obtains the consent of the credits that represent 75% of the total unsecured liabilities, the New ABL includes an alternative to obtain the approval of the debtor's proposal (i.e., even without having the majorities in all of the categories in which the creditors have been classified). However, the majority should be obtained at least in one category. To date, there are no precedents under Argentine law of this form of calculating majorities.

(ix) Out of Court Proposal. The New ABL also includes the possibility for the debtor to negotiate and ask the judge to approve what is called an Out of Court Proposal. This procedure avoids the need of following the ordinary court procedure, and requires the same majorities included in the ordinary proposal applicable to all procedures, except for what is noted in Section (viii) above. The filing of the proposal before the judge requesting his approval suspends the enforcement of actions that might be in course. Although the wording of this amendment is not clear, it appears that the Out of Court Proposal could be imposed, if approved by the judge, to all unsecured creditors, even those that did not consented to such proposal.

The above is simply a summary of the main aspects of the new amendments to the Argentine Bankruptcy regime. Please feel free to contact the undersigned should you need any further clarifications. Many thanks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions