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Creditors' Proceedings // What They Are and Their Stages - WorkCapital

Written by admin | Sep 2, 2026, 10:40:50 AM

Insolvency proceedings are a legal process that any company facing financial difficulties may have to undergo.

It is, therefore, a process designed to help insolvent companies establish a system that allows them to address their current debts.

In short, the debtor turns to the courts to bring order to the situation and pay off its debts.

What is the purpose of insolvency proceedings?

Insolvency proceedings seek to achieve a comprehensive solution to the insolvency situation.

On the one hand, it protects the debtor’s creditors and ensures they can collect their claims in the most orderly and efficient manner possible.

To this end, creditors may only file claims through the insolvency proceedings and will be paid to the extent that assets are available to satisfy their claims.

At the same time, the process aims to ensure the continued operation of viable companies.

In other words, the law provides mechanisms to allow such companies to restructure and reach agreements with creditors that enable them to continue their operations.

When this is not possible, the law provides for the closure of the company and the orderly liquidation of its assets to pay off its debts (or as much of them as possible).

Stages of the Bankruptcy Proceedings

Common Phase

Section 1
  • Declaration of bankruptcy through the filing of the necessary documentation.
  • Adoption of precautionary measures.
  • Decision on the petition and conclusion.

Section 2
  • Appointment of Insolvency Trustees
  • Performance of the Insolvency Administrators’ Duties.

Section 3
  • Determination of the estate.

Section 4
  • Determination of liabilities.
  • Classification of claims (special, general, ordinary, and subordinated).

Arrangement Phase

Section 5
  • Establishment of a possible debt reduction and payment deferral, as provided in the arrangement.
  • The debt reduction may never exceed 50% of the initial debt, and the repayment deferral may never exceed 5 years from the date of the bankruptcy filing.

Liquidation Phase

Section 5

If sufficient debt forgiveness and deferral agreements cannot be reached, the liquidation phase begins.

The liquidation phase may be initiated at any time during the insolvency proceedings, at the debtor’s request, but also—among other cases—if no proposals for a reorganization plan are submitted or none of them are approved.

This phase involves the sale of all the debtor’s assets to pay off as much of the debt as possible (in accordance with the legally established order of priority).

During this phase, the debtor loses its powers of administration, disposition, and management, which are transferred to the insolvency administrator.

Classification

Section 6
  • Resolution of the Insolvency Proceedings.

At WORKCAPITAL, we resolve this highly sensitive situation; the good news is that alternative financing is available for companies in insolvency proceedings—both for those already in the process and for those trying to avoid it— to secure the necessary liquidity that will allow them to settle their debts, strengthen their cash flow, and avoid being listed in the CIRBE.

Our service is specifically designed to address your financial needs quickly and easily, with a particular emphasis on prompt responses to our clients, straightforward procedures, and simplified processes for finalizing transactions.

Workcapital provides alternative financing for companies in bankruptcy proceedings

Our service is specifically designed to meet your financial needs quickly and easily, without complicated procedures or paperwork.

We’ll review your case with no obligation.

Directly from person to person.
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