|Selva del C. Quintero M.|
Panama has enacted a new bankruptcy regime, via Law 12 of March 19 2016. This law will enter into force on January 2 2017.
The ultimate goal of the new legislation is to protect creditors. It does this through reorganisation proceedings that ensure the recovery and preservation of efficient companies and reforms that ensure the prompt and orderly liquidation of companies .
The new regulation has the following purposes:
- create a special jurisdiction and design a streamlined system, in which most disputes are settled via incidental pleas;
- stipulate temporary initial expenses, while preserving the rights of the committee of creditors on all these decisions;
- regulate the insolvency chapters in the Judicial and Commerce Codes, adding two sections that contain innovative regulations;
- add the principle of negotiability, where all parties can participate in proceedings to facilitate global, non-litigious solutions to save a company. Liquidation proceedings can be transformed into reorganisation proceedings, and vice-versa;
- create the legal concept of proactive debtors. These debtors can act in good faith to save or liquidate a company and can participate in reorganisation plans from the start;
- criminalise fraud committed by creditors and decide on the restitution of property to the bankruptcy estate and the payment of indemnities. Achieving this requires amendments to the Criminal Code, substituting fraudulent bankruptcy as a punishable act. Instead, there will be attenuating circumstances for those who provide information or help to prevent the crime, locate or return the property, and assume payment of the debtor's obligations;
- promote equal protection for national and foreign creditors, by regulating cooperation among states in cases of cross-border bankruptcy.
Selva del C. Quintero M.