Argentina: The Restructuring Review - Argentina

Last Updated: 5 October 2012
Article by Ricardo W. Beller and Martin Campbell


i. Liquidity and state of the financial markets

The international financial markets have not been accessible to either the private or public sector of Argentina since the second half of 2007. During this period Argentina faced its own financial restrictions, to which it later added the international financial turmoil that resulted from the subprime crisis and the fall of leading financial institutions such as Bear Stearns and Lehman Brothers, among others, and more recently the European crisis.

Despite the difficulty of accessing the international financial markets, Argentina has almost completely restructured its defaulted sovereign debt. In June 2010 the Argentine government closed a successful second debt restructuring exchange of its bonds in default. The first exchange offer had been made in 2005, and had been accepted by approximately 76 per cent of the holders of the bonds in default at that time. The aggregate amount of debt restructured in this second exchange was US$18.3 billion. The second exchange was accepted by approximately 70 per cent of the remaining holdouts. Adding the results of the first and second exchange, approximately 92 per cent of the sovereign debt in default has been restructured. The bonds that were not exchanged represent approximately US$5.5 billion, and are held mostly by distress funds, most of which have filed judicial claims against Argentina.

ii. Inflation, slowing down of the economy and exchange control restrictions1

2011 ended on a high note for the Argentine government. GDP grew by 8.9 per cent and Cristina Fernandez de Kirchner was re-elected president by an overwhelming majority of 54 per cent with no significant political opposition; in 2012, however, the situation is not so favourable. Argentina is facing a significant increase in inflation, combined with a slowing down of economic activity: economists refer to this phenomenon as 'stagflation'.

Annual inflation sat at 10.9 per cent in 2006, 8.8 per cent in 2007, 8.6 per cent in 2008, 6.3 per cent in 2009 and 10.8 per cent in 2010.2 In 2011 it increased significantly to 22 per cent per annum, and is projected to reach 25 per cent per annum in 2012.3 GDP, on the other hand, is estimated to grow by 2.2 per cent per annum in 2012,4 which is a significant decrease compared with the growth of previous years: 8.5 per cent in 2006, 8.7 per cent in 2007, 6.8 per cent in 2008, 0.9 per cent in 2009 (a low year due to the 2008 financial crisis in the United States and Europe), 9.2 per cent in 2010 and 8.9 per cent in 2011.5

The inflation has not been accompanied by a proportional devaluation of the Argentine peso, which is relatively overvalued with respect to other currencies. As a result, Argentina is losing competitiveness in its exports, which are relatively more expensive, and is seeing higher demand of imported products and foreign currencies, which are cheaper.

To deter capital flight during 2012 the Argentine government has significantly increased foreign exchange controls. Transfers of funds from Argentina to foreign countries has been increasingly restricted, as has access to exchange pesos for foreign currencies in the official market. This has led to a significant volume of foreign exchange transactions being carried out in the informal market, with a higher difference between the official and the informal exchange rates. As of 30 June 2012 the exchange rate of the informal dollar, locally known as the 'blue' dollar, was approximately US$1 to six pesos, while the official exchange rate was of US$1 to 4.5 pesos.

iii. Greater intervention of the Argentine government in the economy

Increasing intervention of the Argentine government in the economy is decreasing the level of investments being made in the country and increasing capital flight.

Most notably, in May 2012 the government expropriated 51 per cent of the shares of YPF Sociedad Anónima and 51 per cent of the shares of YPF GAS SA. The expropriation process of the controlling stake of these companies owned by Repsol, a Spanish oil and gas company, was initiated in April 2012 by a presidential decree by which the boards of directors of these companies were removed and replaced by two government interveners. The grounds for expropriation alleged by the government were the low level of investments of the company and the resulting decrease of oil and gas reserves. Several claims have been filed by Repsol against the Argentine Republic, which are currently pending resolution.

A prior event that had a negative impact on investments was the expropriation of Argentine pension funds ('the AFJPs'). In November 2008 the Argentine government took over the securities held by these, most of which consisted of equity and debt instruments of Argentine private companies, as well as government bonds. The AFJPs were key players in the Argentine capital markets until then. Their disappearance had a severe negative impact on the local markets, which currently do not offer a relevant source of financing to Argentine companies.

iv. Impact of specific regional and global events

Argentina's access to international financial markets has been restricted since the crisis of 2001, in which Argentina declared the default of its sovereign debt. Argentina has relied on significant trade surpluses, taxes on exports and accumulation of international reserves to overcome these restrictions.

The subprime market crisis in the US and the recent European crisis have not significantly affected some of Argentina's main trading partners, such as Brazil and China, whose economies continue to grow and have a demand for Argentinian products. These crises have therefore not had a significant effect on the Argentinian economy.

Argentinian private-sector companies have also had limited access to financing in recent years. However, significant consumer demand in the local market plus exports to other countries that demand their products have allowed most of them to finance their activities.

v. Market trends in restructuring procedures and techniques employed during this period

There have been two trends in recent years that may be mentioned: there has been a greater involvement and intervention of the Argentinian government in the event of insolvency of a company that provides public services; and several bankrupt companies were taken over by workers, who continued to operate them after bankruptcy.

Greater government intervention

In December 2008 Transportadora de Gas del Norte SA ('TGN'), one of the two companies that provide gas transportation services in Argentina, announced the deferral of the payment of principal and interest of its debt represented by certain type of bonds denominated 'negotiable obligations'. TGN also announced that it would prepare a plan to be proposed to its creditors for restructuring its financial debts. As a consequence, on 29 December 2008, the Argentinian Regulatory Agency for the Regulation of Gas ('ENARGAS') appointed an officer to act as an auditor and perform the 'co-administration' of the company for 120 days, alleging that the provision of the public service of gas transportation was being put at risk as TGN was in default. The governmental intervention in TGN was further extended through different resolutions of ENARGAS and the government was still intervening in TGN in 2011. After the default, TGN did make an offer to its creditors holding bonds that had an important consent from the holders. However, since TGN's cash flow has not improved due to the decision of the government to avoid increasing the tariffs for transportation of gas, TGN decided to withdraw its offer and filed for a judicial restructuring proceeding (concurso preventivo). Due to procedural reasons, the judge hearing this petition decided not to open the process, and as a consequence TGN appealed such order. The Court of Appeals resolved that TGN is precluded from restructuring its debt by means of this concurso preventivo proceeding. To overcome this situation, on 12 July 2012 TGN launched a debt exchange offer that is due to be finalised in August 2012.

The case of Metrogas SA ('Metrogas') is very similar. Metrogas is a public company that provides gas distribution as a public service. On 17 June 2010 Metrogas announced its decision to file for a reorganisation procedure, considering that the company would not be able to pay the upcoming maturities of financial debt and other commercial and tax debts, among other things. As a consequence of this decision, on the same date, ENARGAS resolved to appoint an officer as auditor to control all acts of habitual management of the company that might affect the provision of the public service. ENARGAS intervened in the company for 120 days, on very similar terms to the intervention provided for TGN. Metrogas is currently restructuring its debt by means of a concurso preventivo. Gas Argentino SA, its controlling shareholder, is also conducting a concurso preventivo proceeding, but its proposal has not still been approved by the creditors.

The Argentinian government also appointed an auditor to supervise Autopistas del Sol SA ('AUSOL'), in a manner very similar to the TGN and Metrogas involvement. AUSOL is a public company that holds the concession to exploit certain highways and provides a public service for traffic purposes. On 16 November 2009 AUSOL announced that it would not pay the interest maturing on the following days in a timely manner, and such interest would be part of a restructuring proposal to be made to the financial creditors of the company. As a result, the government appointed an auditor to supervise AUSOL, which continues to be supervised. AUSOL is discussing a negotiated plan with its creditors to restructure its debt.

Therefore, in the event a company that is facing financial difficulties provides a public service, special consideration should be given to the fact that the Argentinian government shall probably appoint an auditor to supervise the debt restructuring process.

vi. Number of formal procedures entered into or exited during this period

We do not have a precise number of proceedings filed during this period, but we ascertain from publicly available information that the quantity of reorganisation procedures entered into during 2011 was relatively stable compared with previous periods (slightly increasing), whereas the number of bankruptcy procedures slightly increased.


i. Formal and informal insolvency and restructuring procedures

There are various alternatives available to companies that are facing financial difficulties. The alternative that may be implemented in each case will depend on the degree of insolvency of the company, the likelihood that it will be able to formulate a restructuring plan in terms that are acceptable to a sufficient majority of creditors, the activities carried out by the company and the willingness of the debtor to continue its business activities.

The alternatives that are most commonly used are:

  1. out-of-court restructuring agreements and exchange offers;
  2. pre-pack agreements under an acuerdo preventivo extrajudicial procedure;
  3. concurso preventivo (similar to Chapter 11 of the US Bankruptcy Law);
  4. bankruptcy;
  5. special insolvency proceedings; and
  6. voluntary dissolution and winding up.

The first option consists of a private agreement between the debtor and its creditors without judicial intervention. The second, third and fourth alternatives are the main insolvency proceedings provided under the Argentine Bankruptcy Law 24,522, as amended by Laws 25,563, 25,589 and 26,684 ('the Bankruptcy Law'), and require judicial intervention as described below. The fifth alternative refers to companies that are required to restructure their debts under special insolvency proceedings regulations (e.g., financial institutions and insurance companies). Finally, the voluntary dissolution and winding up is a liquidation procedure carried out voluntarily by the debtor.

Out-of-court restructuring agreements and exchange offers

The debtor may enter into a restructuring agreement with all or a portion of its creditors applying exclusively the contractual terms of its debt obligations, without undergoing any of the procedures provided under the Bankruptcy Law.

If the restructured debt includes publicly offered notes or other securities, the debtor would generally conduct an exchange of its outstanding notes for new notes that would reflect the terms of the restructuring.

Direct exchange offers of publicly offered notes raise, among others, the following issues:

  1. The exchange is a voluntary process. Bondholders are not forced to accept the exchange offer, nor are the terms of the new notes enforceable against them. Therefore, the 'holdouts' who do not tender their notes will preserve their rights to bring legal actions against the company under the old notes, including the right to petition for involuntary bankruptcy.
  2. The exchange process is governed by applicable securities laws, including the regulations of the Argentinian National Securities Commission, the Buenos Aires Stock Exchange or other applicable stock exchange or over-the-counter market in which the securities may be listed, and the regulations of the US Securities and Exchange Commission if the securities are registered in the United States.
  3. The exchange process requires the preparation of disclosure documents describing the terms of the exchange offer, including an information memorandum and other documents required by securities regulations.
  4. In the event the restructured notes are negotiable obligations issued under Law 23,576, as amended, or certificates issued under an Argentinian trust created under Law 24,441, careful attention must be paid to the structuring of the exchange to preserve applicable tax exemptions. The same applies in the event the restructuring is implemented under an APE procedure (as described below).

Pre-pack agreement under an acuerdo preventivo extrajudicial procedure

The acuerdo preventivo extrajudicial ('APE') is a procedure provided under the Bankruptcy Law by which a debt restructuring agreement that is entered into by a debtor with a certain majority of its unsecured creditors becomes enforceable against all the unsecured creditors, including those that did not consent or voted against it.

The enforceability of the APE against all unsecured creditors is the key feature that makes the APE an extremely useful tool to achieve a successful debt restructuring.

To become enforceable against all unsecured creditors, two basic requirements need to be complied with: the APE debt restructuring agreement must be consented to by the majority of creditors provided by the Bankruptcy Law; and the court must endorse or validate the agreement (this court ruling is designated a homologación, which basically consists of a judicial confirmation that the Bankruptcy Law requirements have been complied with).

Any company or individual can enter into an APE, with a few exceptions related to certain activities that are regulated by special insolvency rules (e.g., banks and insurance companies).

The restructuring proposal generally comprises all unsecured debt obligations. Once the restructuring agreement is executed by an amount equal to or greater than the required majorities (as defined below), the debtor files the executed restructuring agreement with the court and initiates the APE. The petitioner must show the company is suffering general economic or financial difficulties, or is insolvent. Such difficulties are not required necessarily to represent insolvency or a 'suspension of payments' status. The documentation to be filed shall include documentation describing the financial situation of the debtor, including, inter alia, a statement of assets and liabilities, a list of creditors and the amount of capital and percentage of debt represented by the creditors who have signed the APE.

The majorities of unsecured creditors that must consent to the restructuring agreement for the APE to proceed are as follows: the absolute majority (more than 50 per cent) of all unsecured creditors, determined on a headcount basis; and at least two-thirds of the aggregate principal amount of such unsecured debts ('the required majorities'). Unsecured creditors that are also controlling shareholders of the company are not taken into account when determining the number of creditors required to consent to the APE or the amount of outstanding unsecured debts of the company.

Under the Bankruptcy Law, the court should not conduct a substantive review of the APE proposal (although in certain APE proceedings abusive practices have resulted in stricter scrutiny by the courts). The non-consenting creditors may oppose the court endorsement based only on grounds of omissions or exaggerations of the assets or liabilities, or the absence of the consent of the required majorities. Abuse of rights by the debtor has also been an argument accepted by the courts to reject the endorsement of APE agreements. If the oppositions, if any, are rejected and the required majorities and legal requirements have been complied with, the court should endorse the APE.

The effects of the restructuring agreement that undergoes an APE procedure can be divided into three different stages: effects as of execution of the agreement; effects as of filing the APE before the relevant court; and effects as of court approval.

The restructuring agreement becomes binding on the signatory parties as of the execution date, and shall be effective among them in accordance with its terms.

In practice, restructuring agreements generally provide a series of conditions precedent that must be complied with prior to effectiveness, including a minimum threshold of consenting creditors that must consent to the agreement.

Filing of the APE before the relevant court, provided the required majorities have been met and other requirements of the Bankruptcy Law have been complied with, shall have the following effects, inter alia: all actions to enforce claims against the debtor that are not secured by a pledge or mortgage, or have a preferred payment right created by the Bankruptcy Law, are stayed; the commencement of similar actions against the debtor are prohibited; and interest on outstanding debt continues to accrue.

Upon court approval, the restructuring agreement terms become effective against all unsecured creditors, including those that did not consent or expressly objected to it.

The procedure on average takes between six and 18 months depending on the volume and nature of debts being renegotiated, the size of the debtor and the objections filed by creditors (if any). It should be noted that if part of the debt is represented by securities that have been publicly offered, noteholders' meetings could be required to be called to consent to the APE, which could make the process longer.

Concurso preventivo

The concurso preventivo is a judicial insolvency proceeding initiated by a debtor to restructure its outstanding debts. The concurso is similar to the Chapter 11 proceedings under the US Bankruptcy Code.

Only the debtor can commence a concurso proceeding, either by initiating the concurso directly or by converting an involuntary bankruptcy petition filed by a creditor against it into a concurso.

To initiate the concurso the petitioner must show the company is insolvent or has entered into a 'suspension of payments' status. The petitioner is required to file with the court, among others:

  1. corporate by-laws and records;
  2. an explanation of the express causes of the debtor's financial condition, specifying the date it became unable to pay its debts;
  3. a detailed and valued statement of assets and liabilities with an opinion of a certified public accountant;
  4. financial statements;
  5. a list of creditors, including a dossier for each creditor containing a copy of the documents evidencing the reported debt; and
  6. a report describing the legal and economic situation of the debtor's employees.

Upon the commencement of the concurso, the court will appoint a receiver, who is an individual randomly selected from a list maintained by the court, generally composed of local accountants. The receiver is responsible for reviewing and advising the court regarding the debtor's proposed plan, disputed claims and all other matters relating to the creditors' rights. In addition, the receiver supervises the administration by the board members and management of the company business and advises the court regarding certain specific acts the debtor may wish to perform.

After the proof of claims is filed and decided by the court, the court shall also appoint a provisional committee among the three creditors with the largest approved claims, and a representative of the employees if the debtor is a corporate entity. The purpose of this body is to act as information agent and provide advice. The final creditors' committee (with the same composition as the provisional committee) is the overseer required at the stage of performance of the plan approved, and in the liquidation in the case of bankruptcy.

After commencement of the concurso proceeding, the court will prescribe a period during which creditors must file evidence of their claims to the receiver for verification. All creditors, including secured creditors, are required by the Bankruptcy Law to have their claims against the debtor verified and accepted by the court. The debtor and any creditor may challenge the requests filed with the receiver. At the end of such verification period, the receiver is required to prepare and present a report with its recommendation as to each claim submitted for verification. The court will decide on the recognition or dismissal of each credit. The recognition or dismissal of credits may subsequently be reviewed before the court by the debtor and the creditors.

The debtor must then present a payment plan covering all the unsecured debts and, at the debtor's option, may also include privileged debts ('the plan'). The debtor may also propose to divide the creditors into different categories, based on reasonable grounds of classification.

An 'exclusivity period' follows during which the debtor is the only person with the ability to propose the plan to its creditors. The exclusivity period is 90 days, but the court may grant an extension of an additional 30 days based on the number of creditors. In some cases, judges have also authorised longer extensions taking into account the complexity of the proceeding.

During the exclusivity period, the debtor must obtain the approval of the same required majorities as provided for the APE, with the following clarifications that are specific to the concurso: the only creditors who can vote are those whose claims against the debtor are verified and accepted by the court; and each category of creditors must approve the plan by the required majorities, on the basis of the creditors verified in each category.

Once the plan has been approved by the required majorities, the judge must conduct a substantive review of the terms of the plan prior to approving it. The judge may, if he or she considers that the plan does not comply with the rules of the Bankruptcy Law or is abusive, elect not to approve a plan accepted by the required majorities, or on the other hand approve a plan that was not accepted by the required majorities, upon compliance with certain requirements.

If for any reason the debtor fails to propose a plan, or the proposed plan is not approved by the required majorities, the special bidding process explained below begins.

Upon failure to agree to a plan during the 'exclusivity period', the court will initiate a special bidding process (sometimes also referred to as a cramdown procedure), which is a process pursuant to which the debtor, the creditors, the employees under a labour cooperative entity or third parties may propose plans for the restructuring of the debts of the company and may acquire the company's stock. To be authorised to participate in this proceeding the interested parties must be registered before the court. The special bidding process is available only if the debtor is a company with equity that may be acquired by the creditors, such as a limited liability corporation, a sociedad de responsabilidad limitada or a cooperativa.

Upon failing to obtain the required majorities to approve the plan of the concurso, the court will open a registry during a term of five days where any creditor, the debtor's employees through a cooperativa de trabajo (workers' cooperative) or interested party may register to offer a restructuring plan to the company's creditors, and to purchase the stock of the company. The law does not restrict the shareholders, the debtor or other persons from registering.

If there are registered persons, the bidding process is initiated. The court will determine the value of the company's stock based on an appraisal of an evaluator appointed by the court. A 20-day period then commences during which registered persons, including the debtor if the debtor is registered, will present restructuring plans to the creditors and pursue the approval of the same required majorities as those required for the concurso. The creditors' consent is not exclusive, as creditors may consent to more than one plan.

The first registered person to file evidence with the court showing that it has obtained the required majorities is awarded the right to purchase the company stock and enter into the approved plan it proposes with the creditors.

If the first person to obtain the required majorities is the debtor, the proposed plan is approved following the same procedure as in the concurso. If the required majorities are obtained by another person, the valuation of the stock of the company determined by the judge will be considered. If the stock has negative value, the stock will be transferred to the registered person simultaneously with the court endorsement of the plan. If the stock has positive value, the judge will issue a new valuation taking into consideration the terms of the approved plan. The registered person then has the option to pay the stockholders the stock value determined by the court, or pay a lower value if it obtains the consent of stockholders who own at least two-thirds of the stock of the company.

Once the required majorities are obtained and all requirements are complied with as specified above, the court will endorse the approved agreement. If no person registers within the specified term, or if none of the plans are approved by the required majorities, or the court does not endorse the approved plan, the court will declare the bankruptcy of the company.

Even though the special bidding process is provided under the Bankruptcy Law, there have been few significant cases in which it has been implemented.

The commencement of a concurso has, inter alia, the following effects:

  1. the accrual of interest on unsecured claims is suspended; interest on secured debts will continue to accrue, but may only be claimed to the extent of amounts realised from the assets or property subject to such security interests;
  2. all actions to enforce claims against the debtor that are not secured by a pledge or mortgage are stayed, and the commencement of similar actions against the debtor is prohibited;
  3. all claims against the debtor may be filed before the judge presiding over the concurso, at the creditor's request or, in the case of actions already initiated, continued in the original court; secured creditors with mortgages or pledges can continue enforcement actions, but in the event of 'need and urgency' the court may suspend such proceedings for a period of not more than 90 days;
  4. all future obligations of the debtor are accelerated, so that all such obligations are treated as due as of the filing of the petition;
  5. the existing board and management of the debtor retain authority to operate the debtor's business; transactions outside of the ordinary course of business, including the granting of liens, transactions involving 'registrable assets' (such as real estate, vehicles, planes, ships or securities) and similar significant matters require court approval;
  6. to approve transactions involving 'registrable assets' and similar significant matters, the court will request the opinion of the receiver and of the creditors' committee (if it has been nominated) before ruling, but is authorised to approve such transactions solely in cases of evident need and urgency; and
  7. the management is free to use and allocate any operating income, except that no dividends can be distributed; the extent of the management's fiduciary duty as to the conservation of the value of the company has not been clearly established, except in the case of fraud.

The concurso has certain similarities compared with the APE. Both procedures:

  1. result in a restructuring plan becoming enforceable against all unsecured creditors upon court approval;
  2. need essentially the same required majorities to be approved; and
  3. result in a stay of all claims of unsecured creditors against the debtor as of judicial filing.

However, among other differences:

  1. the judicial filing of a concurso suspends accrual of interest, while the filing of an APE does not;
  2. APE proceedings are faster and cheaper;
  3. in a concurso a receiver needs to be appointed and creditors need to undergo a verification of credits procedure, while none of this occurs in an APE; and
  4. the APE has a less negative impact on the debtor's image.

The concurso generally takes between one and two years, but in some cases may be extended for several years. Timing will significantly depend on the volume and nature of the debt being renegotiated and the size of the debtor and the complexity of the proceeding.


Under the Bankruptcy Law, the general purpose of a bankruptcy is to identify all the assets and liabilities of the debtor, liquidate the debtor's assets and distribute the proceeds of such liquidation among all creditors in accordance with their verified claims and in the order of preference, and, after giving effect to priorities, established by the Bankruptcy Law.

A bankruptcy may be commenced either voluntarily upon the petition of the debtor or involuntarily upon the petition of one or more creditors. The petitioner must show the company is insolvent or has entered into a 'suspension of payments' status. If the petition is made by a creditor, the creditor must submit evidence that the debtor qualifies for bankruptcy proceedings and offer sufficient evidence of his or her claims, and prove that the debtor has suspended or defaulted compliance of its obligation to the petitioning creditor, or is otherwise unable to comply regularly with its obligations. In the case of an involuntary bankruptcy, after the petition has been filed with the proper court and all necessary evidence presented, the court will summon the debtor to provide an explanation of the reasons why payment of the obligations in favour of the petitioning creditor has not been made and to prove that the debtor is solvent. If the debtor does not demonstrate its solvency, the court will declare the debtor to be bankrupt. In such case the debtor has the right to transform, in a given term, the bankruptcy into a concurso proceeding.

In bankruptcy, creditors must request verification of their claims, preferences and priorities in the same manner as specified above for concurso, and provide the receiver with information as to the total amount, reason and privileges of each claim.

The receiver has to file with the court a proposal for the allotment to the creditors of the proceeds obtained from the liquidation of the debtor's assets. The judge will then submit the proposal for the consideration of the creditors. Any creditor may challenge the final report prepared by the receiver, and the court in turn may approve, modify or disallow any portion of the report before discharging the petition. The receiver will seek the appointment of a creditors' committee to supervise the liquidation of the assets. The creditors with the majority of claims shall elect the committee.

The commencement of a bankruptcy proceeding, inter alia, has the following effects:

  1. the accrual of interest on unsecured claims is suspended; interest on secured debts will continue to accrue, but may only be claimed to the extent of amounts realised from the assets or property subject to such security interests;
  2. all actions to enforce claims against the debtor that are not secured by a pledge or mortgage are suspended, and the commencement of similar actions against the debtor are prohibited;
  3. secured creditors may file actions to enforce their pledge or mortgage to the extent there is a final judgment resolving about the title on such securities, provided that the coorperativa de trabajo requests such enforcement may be suspended by the judge presiding over the bankruptcy for a two-year period;
  4. all actions against the debtor are consolidated before the judge presiding over the bankruptcy; secured creditors may continue enforcement actions;
  5. all future obligations of the debtor become accelerated, so that all such obligations are treated as due as of the filing of the petition;
  6. all claims denominated in foreign currency are converted into Argentine pesos at the exchange rate of the maturity date of the credit or the day the bankruptcy was declared; and
  7. the cooperativa de trabajo or the receiver, as the case may be, is appointed to succeed to all managerial power of the debtor; upon a declaration of bankruptcy, actions taken by the bankrupt debtor in respect of property of the estate, as well as payments made or received, are, by operation of law and without judicial declaration, void in respect of creditors; the debtor's former managers are required to deliver custody of the business, including all books, records, real property and equipment, to the cooperativa de trabajo or the receiver, as the case may be, and are required to provide the judge and the cooperativa de trabajo or the receiver, as the case may be, with all assistance that they may require in order to clarify the state of the debtor's business and to verify the claims against the estate; the cooperative de trabajo or the receiver, as the case may be, may apply to the court for authority to continue actively to operate the debtor's business, upon proof that a shutdown will cause irreparable injury to creditors and to the preservation of the bankrupt's net worth.

Please note that some of the effects described above may have occurred prior to bankruptcy as a result of the company having previously filed an APE or a concurso before the court. The process generally takes several years. Timing will significantly depend on the volume and nature of the debt being renegotiated and the size of the debtor.

Special insolvency proceedings regulations

Insolvency proceedings of companies involved in certain activities, such as banks and insurance companies, are governed by special regulations and are conducted before or with the intervention of the governmental agency that supervises the industry in which the company carries out its activities (e.g., financial entities and insurance companies may not file a concurso or an APE proceeding; special insolvency proceedings are available for financial entities that are carried out before the Argentinian Central Bank; and liquidation proceedings of insurance companies require the intervention of the Superintendent of Insurance).

Of the different special insolvency proceedings existing, the proceeding for financial entities provided under Article 35-bis of the Financial Institutions Law is worth mentioning. Under this proceeding, the Argentinian Central Bank authorises the exclusion and transfer of privileged assets and liabilities to a trust. The credits of depositors and the Argentinian Central Bank are included in the list of privileged creditors who have guarantees of the trusts' assets. The remaining creditors (those considered unsecured creditors) are required to verify their credits before the bankruptcy court, which will liquidate the remaining assets that were not transferred to the trust and distribute the proceeds between the creditors whose proof of claim has been accepted.

Voluntary dissolution and winding up

A company may also voluntarily resolve to dissolve and wind up its business. The aim of the winding-up process is to liquidate the company's assets, settle its liabilities and distribute any balance to shareholders in proportion to their paid-up capital. During the winding up, the liquidator may only effect liquidation acts and may only involve the corporation in actions that are not evidently foreign to the winding up. The winding up may be carried out by the management or other appointed liquidators.

To read this article in full, please click here.


1. Part of the following section originally appeared in Simon Robinson (Ed.), The Mergers & Acquisitions Review, Ricardo W Beller and Agustina M Ranieri (6th. Edn, London, 2012).

2. Information obtained from World Bank,

3. Predicted inflation as projected by private consulting agencies, as published by certain members of the Argentine Congress.

4. As estimated by the World Bank in its June 2012 edition of 'Global Economic Prospects'.

5. Information obtained from World Bank,

Previously published in The Restructuring Review, 5th edition

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.

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    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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