Viable companies winding up in Chile? Reflections on the absence of substantive judicial control mechanisms in reorganization procedures

Abstract

The Chilean bankruptcy law entrusts the accomplishment of bankruptcy proceedings to the self-interested assessment of creditors and does not foresee the substantive judicial approval of the agreement proposal presented by the debtor company. This legal design has led to the winding-up of viable companies because the assessment of the debtor's viability in reality is distorted by each creditor's self-interest, to the detriment of the group's interests. In this context, through a methodological analysis of the law's interpretation elements, this work demonstrates that the bankruptcy judge, in accordance with the autonomous nature of the reorganization agreement which considers the judicial function as part of the agreement and guarantor of the fulfilment of the rights of the general body of creditors during the reorganization process; and, the principle of conservation of the viable company, can act ex officio by requesting informative measures that the discussion about the viability of the debtor company.