The liquidation proceedings of private companies in Colombia are primarily governed by Law 1116 of 2006, from which rights and obligations arise for all interested parties in the process, including any person to whom the company in liquidation owes money (for products, services, movable or immovable property). However, in practice, it is not very common for creditors to exercise many of their rights or to exercise them within the legal term to do so, and therefore they may be left out of the liquidation, resulting in the non-payment of their claim.
These rights provided under Law 1116 of 2006 for creditors correspond not only to those special articles that determine them, but are also subject to the quality of the credit, the status of the creditor, and even the commercial relationships that were or are currently in force with the company in liquidation. To this end, we will provide an overview of the rights that creditors have in liquidation proceedings and what actions they could take to protect their interests.
Such rights are as follows:
- FILE THEIR CLAIM
It should be noted that when a judicial liquidation proceeding is initiated under Law 1116 of 2006, the entity responsible for hearing the case, which is generally the Superintendence of Companies, issues a NOTICE of liquidation establishing a peremptory term within which all interested parties seeking payment of a debt must inform the liquidator and the Superintendence of Companies of such situation.
Therefore, creditors may only claim debts that are duly supported and that arose prior to the commencement of the liquidation proceeding. Additionally, the Law brings with it a special circumstance, since with the commencement of the liquidation and the filing of the respective claims, the statute of limitations is suspended; therefore, debts that have not yet been declared time-barred may be collected.
On the other hand, creditors will have the rights inherent to the quality of the credit they seek to satisfy, since the Civil Code, in its articles 2495 to 2509, indicates the priority of credits based on the nature of each debt. For this, we have the following example:
- If a creditor holds labor-type debts (settlement of an employment contract), they will have the right to have their debt recognized as such and to be paid according to that priority, that is, first among the other classes. Likewise, if the worker remained until the time the company is admitted to judicial liquidation proceedings, they will also automatically have the right to severance indemnity for unjustified dismissal in accordance with the prerogatives of the Substantive Labor Code.
- In the case of Social Security debts (outstanding contributions), taxes, contributions, and parafiscal charges, they will have the same rank as the aforementioned credits.
- If the debt in general is secured by a movable collateral (pledge), they will have the right to a second-class priority. Even depending on the structuring of the collateral and the assets it covers, the secured creditor may request that the collateral asset be excluded from the liquidation proceeding and thus be able to pay themselves directly from that asset without having to wait for the proceeding to conclude to obtain payment or the hope of payment.
- In the case of mortgage creditors, suppliers, and unsecured creditors, their rights are subject to other characteristics, such as the origin or structure of the business they established with the company in liquidation. For example, we have financial products such as leasing, where if the company in liquidation has not paid the full amount of the lease or has not exercised the purchase option, the financial institution may request that the leased assets be returned, since they are owned by the institution, and still continue to pursue the debt for unpaid installments. Another example is sales made while the company was operational, where a sale was made and only the delivery of the asset sold was pending for perfection. Therefore, the creditor may argue that such asset be excluded from the liquidation proceeding and be delivered to them in accordance with the sales contract signed or executed before the liquidation (sale of real estate, sale of movable property, products, crops, raw materials, etc.).
- FILE OBJECTIONS TO THE DRAFT CLASSIFICATION AND GRADING OF CREDITS AND INVENTORIES.
On the other hand, creditors will have the right to oppose the general actions of the liquidator, as well as to verify that claims are recognized according to their quality, nature, and timely submission to the liquidation proceeding. They may also review and/or oppose the inventories that are submitted, since if they have information about the company's assets, whether they represent a higher value or they know of the location of other assets, these may be valued and submitted to the liquidation to cover payment to all creditors. Likewise, they may verify the existence or not of obligations owed by other creditors or the recovery of receivables.
- SUBSIDIARY LIABILITY ACTION, ACTIONS FOR SIMULATION.
We also have, on the part of creditors, the actions for simulation and subsidiary liability. The former consists of the possibility of denouncing any action of the company in liquidation that has resulted in the concealment of assets or that the transactions carried out have been to the detriment of the liquidation estate, and therefore against the asset pool, and that as a result the transaction can be reversed to its original state and the assets or monies returned to the company in liquidation. This serves to ensure that there are sufficient assets to pay the debts and that all recognized credits are not left unpaid or unsatisfied. Lastly, we have actions against controlling or parent companies or individuals when their decisions or orders have resulted in the liquidation of the subsidiary companies, and there are not enough assets to pay the debts. Therefore, once it is demonstrated that the decisions of the controlling parties were decisive in the liquidation of the company, they must answer with their own assets for all debts that remain unpaid.
Therefore, we have that creditors, in a judicial liquidation proceeding, have several rights that they can exercise within the process in order to pursue their own interests, collect debts, or obtain purchased assets, or joint interests, such as actions to recover assets or to have debts paid by the controllers of the companies in liquidation in case there are insufficient assets to cover existing liabilities.
Luis C. Ramirez S. – AZC CONSULTING ATTORNEY