The Process of Bankruptcy in Costa Rica
There are many established forms of declaring bankruptcy in our laws, amongst those are included the application of the very manager or administrator of the company that is in the process of bankruptcy or including a creditor that can prove that the has stopped paying, amongst others, (these being the most common).
When the debotr applies for bankruptcy the application should be accompanied by various requirements which include the balance dated and signed, the facts that led to the bankruptcy, general state of the business, amongst others, any inexact data will be a motive to declare the bankruptcy as fraudulent.
After the bankruptcy has been decreed by the judge, it will be decreed that no act be inscribed, whether it be a sale, mortgage, forfeitures, etc. in the Public Registry, communication to banks and lending institutions that they abstain from handing over to the debtor stock issues, any curator (who is the representative in this case of the bankrupt company)and not to the bankrupt company, an embargo on real property of the bankrupt organization.
The Public Ministry must determine if the bankruptcy was applied for in a fraudulent or guilty manner.
Refer to aspects such as fulfilling existing contracts, severance pay, notice, rental contract for the buidling, etc.
Our regulations establish an order of priority of payments, that is, of all the property that the company has at the moment of bankruptcy, they must pay in the following manner:
- Mortgage Creditors and Lendros
- Payment to Workers. The workers enjoy the very special privilege above all creditors, and the curator will be obligated to pay a notice, severance pay, and indeminizations of damage and prejudices if they exist, within 30 days following the formal recognition of the credit. The bankruptcy of the owner is included in the causes for termination of the work contract without responsibility for the worker, but in no moment does he lose the right to be paid corresponding amounts.
- Credit to landlords and renters. In the bankruptcy or insolvency of the renter, the curator is responsible for the representation of the bankruptcy amongst the competition of creditors, exercising the rights and fulfilling obligations derived from the rental contract. The landlord will have the status of privileged creditor, in any pending process or action that must be exercised against the renter or against the bankruptcy or in competition from other creditors.
Mass creditors (expenses that come from judicial expenses such as stamps, honorariums to lawyers, personal costs, taxes, medical assistance expenses, provisions used during the execution of the bankruptcy, amongst others).
- Common credits (the creditors that never legalized their credits)
Is there somewhere on the internet where the pertinent law can be consulted?
Various laws in Costa Rica regulate related issues to bankruptcy, some more special than other in the matter that they regulate. Nevertheless, the Commercial Code, the Civil Process Code, and the Labor Code regulate the established norms for the material. All of it can be found at: http://www.pgr.go.cr/Scij/
What is the equivalent of Chapter 13 in Costa Rica?
Chapter 13 refers to the intervention undertaken by the government of the United States with the purpose of reorganization for the bankruptcy of companies or the insolvency of a physical person. In Costa Rica, although it is unusual and few companies have choses this treatment, there exists what is known as “administration and reorganization with judicial intervention”, which is a process in which the physical person or company that find itself in a difficult economic situation with an end of payments or without them altogether, that is still solvable as long as bankruptcy as not been declared. Very formal requirements must be satisfied, being that beneficiaries must be companies whose disappearance can provoke pernicious social effects, without possibility of substitution.