New Bankruptcy And Restructuring Law Enters Into Force
As of February, 2017, and upon the issuance of Executive Decree No. 20-17, the Dominican Republic has a fully enforceable new Bankruptcy and Restructuring Law (No. 141-15) up to par with current international standards. The new law offers a clearer, more equitable path for economically-distressed companies and will provide both lenders and businesses, local as well as internationally-based ones, greater certainty for their future commercial or financing ventures in the country.
Prior outdated bankruptcy laws in effect before Law 141-15 did not allow for the restructuring of companies in distress and merely gave way for business asset liquidations. The new law shifts the playing field by setting a mandatory restructuring process prior to allowing liquidations to take place.
Aside from exceptions for certain regulated industries, such as Banks and Stock Exchange-related entities, as well as government-owned entities, the law will apply/benefit to any Dominican or foreign entity or commercial individual person with a permanent establishment in the country.
It is also worth mentioning that the new law sets out a regulatory framework to address transnational restructuring or liquidation proceedings.
All bankruptcy and restructuring proceedings as well as any actions related to the debtor's assets, will be heard by two specialized Courts of First Instance and their respective Appellate Courts, which will have territorial jurisdiction over proceedings over their assigned provinces. One is located in Santo Domingo (with jurisdiction over La Romana) and the other one in Santiago.
There are three key stages in the process, which we will briefly summarize below in chronological order:
Restructuring Any creditor with at a credit of at least 50 minimum salaries can file a restructuring request before the Bankruptcy Court against their debtors. The debtor can also do this filing voluntarily. This request must be based in one of the list of pre-established conditions set by the law, of which we find noteworthy to mention our Casa readers the following:
Non-payment of 2 or more salaries to the business' employees. Existence of a restructuring, bankruptcy or insolvency process in a foreign country in which the debtor's parent company or his permanent address is located. Existence of foreclosure or sequestration processes which could affect more than 50% of the assets. Upon receiving the request, the court then appoints a qualified Examiner who will be in...
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