On Dec. 25, ISR Justice consulted on debt settlement laws.
Call for opinions concerns encouragement of early debt settlement and whether or not amendments to insolvency laws introduced during covid pandemic should continue.
Debtor Proceedings
In 2021, due to covid, the Insolvency and Economic Rehabilitation Law was amended.
As part of the amendments, special instructions, for limited period, created a dedicated track of delaying proceedings for debtors seeking to approve debt arrangements.
It allows debtors to obtain from court a temporary and short-term stay of proceedings for purpose of conducting negotiations with creditors to formulate a settlement debt.
It was specified that this dedicated track would operate for a short and limited period of one year, with the possibility of a maximum extension of another year.
The amendment entered into force on Mar. 18, 2021 and will expire on Mar. 16, 2023.
Now the time has come to examine the effects of the amendment, incentives, benefits, harms, manner of use, if gap created between legislative intent and law, reality.
Review so far indicated significant demand among debtors, especially corporations.
It is necessary to examine whether there are justifications for maintaining the change.
Or alternatively, maintaining part of the amendment or building an alternative model.
Purpose of the document is to receive the public's views regarding these questions.
Effectiveness
Public consultation is open until Jan. 19, 2023.
Mar. 2023 Law Approved
On Mar. 22, 2023, ISR Justice issued amendment no. 4 to Insolvency and economic rehabilitation law re delay of proceedings to assist debtors to reach debt settlement.
Amendment 4 gives protection against taking collection proceedings for 3-4 months.
Debtors, individuals and corporations, will be able to act to formulate debt settlements, accompanied by a settlement manager appointed by the court.
As part of the amendment, an opportunity is provided to all debtors to turn to the path of delaying proceedings in order to formulate a debt settlement, without a committed connection between the limitations of the Covid-19 crisis and the creation of debts.
The validity of amendment no. 4 has been extended by 12 months to Mar. 17, 2024.
Mar. 25, 2024 Update
On Mar. 25, 2024, ISR Justice approved the extension of the validity of the temporary order set forth in the Insolvency and Economic Rehabilitation Law by nine months.
The order is extended until Dec. 17, 2024 with possibility of another extension.
As part of the extension, all debtors are given the opportunity to turn to the route of delaying proceedings in order to formulate a debt settlement, without any binding connection between the restrictions of the Corona crisis and the creation of the debts.
A request to delay proceedings to form a debt settlement citizens can be done online.
Dec. 2024 Additional Extension
On Dec. 12, 2024, ISR Justice announced in notice 11595 that the determination period has been extended by an additional three months, until Mar. 17, 2025.
Amendment 4 provides protection against collection proceedings for 3 to 4 months, during which debtors, individuals and corporations, will be able to act to formulate debt arrangements, accompanied by an arrangement manager appointed by the court.
Document dated Dec. 12, 2024, received Dec. 13, summarized on Dec. 18, 2024.
Regulators
ISR Justice
Entity Types
CNSM; Corp; MSB
Reference
Nt 11595, PR, 12/12/2024; PR, OG 3029, 3/25/2024; PR, OG 3029, 3/22/2023; PR, CP, 12/25/2022; OG 2904; COVID-19
