Author

Laura Rozan

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Introduction

Under Argentine Bankruptcy Law, a cessation of payments” (cesación de pagos) duly proven in court can trigger a declaration of bankruptcy against a person or entity, resulting in the debtor being constrained from making payments out of its ordinary resources on a regular basis (Section 1 of the Bankruptcy Law No. 24,522). The debtor or any of its creditors can file a petition requesting the declaration of a bankruptcy, which must be issued by a court. To that end, the judge will determine whether the debtor´s current financial status could be considered as a situation of cessation of payments, which is not a mere default on payments or breach of a singular obligation but rather a general status of the debtor of a permanent nature. Argentine Bankruptcy Law provides a more detailed menu of “cessation of payments” indicators for the judge to declare bankruptcy. For example, the debtor´s acknowledgment of it not being able to honor its debts; the debtor´s managers are missing or hiding and no representative is available; the administrative headquarters are shut down, or the assets are being sold at a vile price or they either hidden or transferred as payment of previous obligations.