We invite you to read the letter written by our director of the Civil Litigation and Arbitration Group, Francisco Fuentes, on the impact that the new Insolvency and Restart Law has had one year after its enactment.
Dear Editor:
It has recently been a year since the enactment of the new Insolvency and Restart Law, and data from the Superintendency show a strong impact of the regulations. According to the entity, debt renegotiation processes for individuals increased by 144% between 2023 and 2024, from 807 cases to 1,968. Likewise, liquidations (bankruptcies) of individuals doubled, with 4,709 cases in 2024 compared to 2,329 the previous year, representing an increase of 102%.
These figures show how our country is moving towards a cultural change. Under the old bankruptcy law, there was a kind of general “fear” of falling into this process, because there was a stigma that “bankruptcy” was synonymous with failure.
Today, the objective of the new law and its reforms has been to change this paradigm: the possibility of renegotiating debts, under the protection of the Superintendency, is an opportunity for individuals to “reorganize their finances,” understanding that this allows them to continue to qualify for commercial credit (if liabilities are reorganized, commercial records or annotations can be eliminated, for example).
All in all, one year after the enactment of this new law, we can say that our country has moved toward a cultural change, breaking down a historical taboo in Chile: acknowledging financial difficulties is no longer synonymous with failure, but rather the first step toward a new beginning. In other words, the law fulfills its objective in that it effectively empowers people.
Letter written by:
Francisco Fuentes | Director of Civil Litigation and Arbitration Group | ffuentes@az.cl
