JUAN M. DOBSON*
Argentina introduced a new bankruptcy law contemplating reorganizations and liquidation bankruptcy on July 20, 1995. The law is designated as No. 24.522 and known as the "Ley de Concursos y Quiebras" (LCQ) As enacted by the Argentine Congress, the law was to come into effect three months after publication and apply only to bankruptcies and reorganizations opened after its implementation. The Executive Department, however, invoked its constitutional power to legislate in situations of "need and urgency" and issued Executive Decree No. 267/95 on August 7, 1995.2 The Executive Decree ordered that the LCQ was to come into force and be applicable to situations in the normal course provided for in Articles 2 and 3 of the Argentine Civil Code.3 There was some discussion of the powers of the Executive Department to issue such a decree, but most jurisdictions in the country have affirmed those powers. So now all proceedings, both reorganizations and liquidation bankruptcies, are governed by the provisions of Law No. 24.522 as of August 1995. The law has suffered no modifications up to March 1997, although several bills have been presented for its reform.
I. THE GENERAL PRINCIPLES UNDERLYING THE LAW
It is well known that bankruptcy law is a tug-of-war among various contestants over the proceeds of the estate of their common insolvent debtor. Some laws emphasize the protection of some creditors, and other laws emphasize the protection of the debtor, depending on which group has had a greater influence on the lawmakers. Thus, some bankruptcy laws can be referred to as "creditor-oriented" or "debtor-oriented," and there may also be ostensible "labor-creditor" and/or "banking-creditor" protection provisions. The new Argentine law introduces another player: the enterprise. The new law, more than trying to help the debtor in distress, has tried to devise mechanisms that may salvage the enterprise without the debtor. Also, more than trying to benefit workers' salaries or other forms of compensation, the law has tried to salvage the enterprise without the employees. The notion of "enterprise salvage" means different things in reorganization and in liquidation, but it is always a backdrop to the normal proceedings:
(a) In reorganization, enterprise salvage is considered an agreement between the debtor and his creditors. If that agreement is not reached speedily, then the debtor's title to equity in the enterprise is open to assignment to interested third parties, a fall-back from the failure to obtain the agreement of the creditors without liquidation.4
(b) In bankruptcy liquidation, enterprise salvage means selling the enterprise speedily, without creditors and without workers.
Both reorganizations and bankruptcies are judicial proceedings having a long tradition of practice in Argentina: bankruptcy derives from colonial laws5 and reorganizations were introduced in 1902.6 The new legislation follows the basic remedies of the previous Law No. 19.551,7 enacted in 1972 and reformed in 1983.8 The previous law was repealed by the new law, No. 24.522, but the new law keeps most of the old law's language, structure, and remedies. I will try in the following paragraphs to refer to some of the additions that I feel are most significant.
It may be said that the changes in the new law are dedicated to putting into practice some of the political ideas of the administration which gave impulse to the reforms and presented the proposals in the Argentine Congress. These political ideas have as their goal the opening of Argentina to the global markets to try to attract capital (foreign or local) to buy failing or failed enterprises. If the enterprise is viable but its owners do not have enough capital, it must then change hands and must do so quickly. This notion is an important orientation of the new legislation.
An unfortunate side effect of this otherwise very fortunate policy is that opening the Argentine markets to the world has evidenced how unviable many Argentine enterprises are in this new light. …