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Argentina

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As the 2019 Novel Coronavirus (COVID-19) continues to spread across the world, and governments and health authorities work tirelessly to defeat it, major economies are experiencing mounting pressure as consumer spending, production and investment are drastically curtailed due to virus-related risks.We recognize that many of our clients are also facing significant and urgent business impact and legal challenges.Our Baker McKenzie teams across the world are working with clients, regulators and various authorities to produce a…

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.