Suspension of Payments

This is a proceeding that contemplates a debtor who isn't insolvent but can't pay his debts when they fall due. The purpose of this proceeding is to allow the debtor to provide his debtors with a new payment scheme. There is no minimum amount of liabilities, payment of obligations will be stayed and secured debtors won't be affected. It also doesn't follow the rules on concurrence and preference of credits in the Civil Code.

The debtor must file a verified petition for suspension of payments with the court of the province or city where he has resided for at least the past 6 months. It must contain the following:

1.) Schedule of debts and liabilities

2.) Asset inventory

3.) Proposed agreement with his creditors

If the court approves of the verified petition, it will appoint a commissioner to preside over a meeting of creditors. The presence of creditors representing claims of at least 3/5 of the debtor's total liabilities is necessary for the meeting to be constituted.

A majority vote in the meeting is decided if 2/3 of the creditors vote on the same proposition and the claim represented by that 2/3 vote amounts to at least 3/5 of the debtor's total liabilities. Caution: a creditor who incurred his credit within 90 days before the debtor filed his verified petition for suspension of payments can vote.

Objections to decisions in the meeting must be based on the following grounds:

1.) The debtor fraudulently connived with one ore more of the other creditors in the meeting to vote in favor of the proposed agreement

2.) Claims were fraudulently conveyed in order to obtain a majority vote

3.) Defects are present in the call of the meeting, its holding and deliberations with the effect of prejudicing the creditors' rights

Any execution in a creditor's favor against the debtor will be suspended. However, if the debtor executed a mortgage in the creditor's favor, the mortgage can be foreclosed independently.