FOLLOWING CHANGES TO THE LAW, PERSONAL BANKRUPTCIES DOUBLE WHILE CORPORATE LIQUIDATIONS FALL 44% THROUGH NOVEMBER
Personal bankruptcies doubled and debt renegotiations increased by 150% between January and November 2024, according to the Superintendency of Insolvency and Entrepreneurship. Meanwhile, corporate liquidations fell by 44.5%, while corporate reorganizations increased by 27%.
The latest report from the Statistical Observatory of the Superintendency of Insolvency and Entrepreneurship (Superir) reveals a mixed picture of insolvency trends in Chile. The figures, covering January through November 2023 and 2024, show a decline in corporate liquidations and a slight increase in corporate reorganizations, while personal bankruptcies and debt renegotiations have recorded significant increases.
Between January and November 2024, corporate liquidations decreased by 44.5%, falling from 1,053 cases in 2023 to 584 in 2024. This decline may reflect not only a more stable economic environment, but also the new mechanisms introduced by Law No. 20,720, which was published earlier this year.
Jorge Lembeye, Partner at Lembeye Abogados, explains that this reduction reflects a shift in how companies approach financial difficulties. “Fewer companies are opting for bankruptcy today and are instead choosing to attempt a reorganization,” he noted. He also highlighted that “some major creditors have shown a greater willingness to refinance corporate debt rather than resort to immediate liquidation.”
Corporate reorganizations, in fact, increased by 27%, rising from 48 cases in 2023 to 61 in 2024. Although moderate, this growth points to a cultural and legal shift toward preserving business operations. However, Lembeye emphasized the need for regulatory adjustments: “It is crucial to move forward with regulations governing corporate groups and to allow the termination of existing contracts that impose an excessive burden on reorganization proceedings. U.S. legislation already provides for this, and our regulatory framework should follow suit to strengthen the economy.”
In contrast to the corporate landscape, personal bankruptcies rose by 100.3%, increasing from 2,113 cases in 2023 to 4,234 in 2024. According to experts, this increase reflects a combination of economic and social factors.
Superintendent Hugo Sánchez told Pulso that the rise in bankruptcies “is attributable to the amendments introduced by Law No. 21,563. Previously, individuals who issued professional fee receipts were required to initiate liquidation proceedings under the legal framework governing proceedings for indebted companies.”
“Today, these individuals can access the new simplified liquidation procedure as natural persons, a much faster process that has eliminated bureaucratic requirements that previously extended processing times. This significant legislative change has led to an increase in applications for simplified liquidation by individuals, alongside a decrease in applications for the liquidation of indebted companies.
“Furthermore, simplified liquidation proceedings now take only six months, compared with two or three years previously, making them attractive to many more people. The new law also allows debtors to re-enter the economy by requiring creditors and debt registry administrators to remove, within 30 days of the conclusion of insolvency proceedings, any debts that have been renewed, rescheduled, or extinguished.”
Valeria Cañas, an insolvency practitioner, stated that “economic hardship, the loss of formal and informal employment, and rising levels of indebtedness are key factors behind this trend.” She also noted that Law No. 21,563 introduced a significant change by classifying individuals who issue professional fee receipts as “individuals” rather than “indebted companies,” as they had been classified previously. This has directly affected the statistics and warrants more detailed analysis.
Meanwhile, the increase in individual debt renegotiations, which rose by 150.4% from 684 cases in 2023 to 1,713 in 2024, is a positive indicator of the growing acceptance of legal mechanisms for debt restructuring. For Cristián Gandarillas, Partner at GMD, this trend reflects “greater adoption of Law No. 20,720 among the general public and lawyers advising clients on insolvency matters.”
Pablo Manterola, an academic at the Faculty of Law of Universidad de los Andes, noted that the current regulatory framework could still be improved, while emphasizing that the changes introduced in 2023 represent a step in the right direction.
“The law can obviously be improved, and academics have identified several areas where clarification or legislative amendments would be highly beneficial. However, the most recent amendment dates back to 2023, so it would be prudent to allow a few more years to assess the results of that reform before undertaking another one,” he said.
Manterola added that “the recent introduction of requirements and restrictions on the discharge effect of the resolution concluding insolvency proceedings, which allows debtors to be released from their liabilities, was a step in the right direction because it limits abuse and strengthens credit. However, we still need to assess how judges are applying these provisions.”
Both Lembeye and Gandarillas agreed that Law No. 20,720 requires urgent adjustments.
Gandarillas stated that “it is essential to allow corporate groups to reorganize without requiring separate, parallel proceedings for each company within the group.” He also called for adjustments to the debt market in reorganization proceedings, particularly with respect to loans and interest rates.
Another challenge identified by Gandarillas is the lack of specialization within the courts. “There is currently considerable inconsistency in judicial approaches because civil courts naturally lack familiarity with these matters. Moving toward the establishment of specialized courts would represent a major step forward for Chile’s insolvency system,” he said.
Insolvency practitioner Valeria Cañas added that any legislative changes must be carefully assessed, particularly following the recent implementation of Law No. 21,563. “Although all legislation can be improved, there appears to be no legislative agenda capacity for significant adjustments in the short term,” she explained.
However, Superintendent Hugo Sánchez argued that “the Insolvency Law, which has been in force in our country for 10 years and was modernized only last year, has proven to be an effective tool for helping individuals and companies navigate financial crises. The amendments introduced by Law No. 21,563 have modernized the procedures, making them more accessible, less costly to pursue, and less burdened by bureaucratic barriers.
“Laws cannot be changed every year. Time must be allowed for the relevant parties to become familiar with them and apply them, followed by an assessment over a reasonable period of at least five years after they enter into force.”
By Leonardo Cárdenas
Pulso – La Tercera