Facilitating access to justice – Overview of LatinAmerican Countries

1. Facilitating access to justice – Overview of LatinAmerican Countries DIANA LUCIA TALERO CASTRO Legal Advisor Superintendency of Companies Colombia July 16, 2014

2. Presentation outline • I. Secured transactions Law and Registry regulations • II. Proteccion of security rights –MSMs access • III. The current matters of MSMs´ Insolvency in LatinAmerica • IV. Alternatives for MSMEs´ Insolvency Proceedings

3. I. Secured transactions Law and Registry regulations • Secured transactions Law Reform: • UNCITRAL Legislative Guide on Secured Transactions • UNCITRAL Guide on the Implementation of a Security Rights Registry

4. Multiplicity of Reforms in Latin America • Peru (2006, reform in process); • Guatemala (2007); • Chile (2007); • Honduras (2010); • México, (2011, reform in process); • Colombia (2013); • El Salvador (2013); • Costa Rica (2014) • Nicaragua ( reform in Process)

5. II. Proteccion of security rights –MSMs access Security Rights Registry Features: • Notice, not document registration • Personal Data Base • Electronic registry: time- and cost-efficiency • Coordination with specialized registries. 5. Judicial or Administrative review Processes, to protect security rights, (Compulsory amendment or cancellation)

6. III.Current Matters of MSMEs Exit • Different Definitions of MSMEs • Lack of robust insolvency framework to support fresh start (Discharge) for entrepreneurs or early rescue (Yan Liu) • UNCITRAL Guidelines may be selectively applied (Yan Liu) • *SMEs adopt very different legal forms • *”The importance of SMEs in the Economy is not matched with a specific set of insolvency rules devised for these businesses: In most modern insolvency regimes there is a liquidation and reorganization procedure for corporate debtors (in most cases, designed with large companies in mind) and a regime for personal bankruptcy.”*The Insolvency of SMEs, José M. Garrido, Insolvency and Creditor –Debtor Regimes Initiative, The World Bank

7. III.Current Matters of MSMEs Exit • Formal insolvency proceedings with high costs, very complicated procedure rules, sophisticated and complex entry requirements (Jose María Garrido) • Out of court regimes not available for MSMs (Yan Liu) • Not a proper system to deal with insolvency of MSMEs (Luis Mejan) • Informal firms would like to formalize, but are prevented from doing so by costly regulations and bureaucracy (Mahesh Uttamchandani)

8. Overview of Insolvency in someLatinamericanCountries (2013) • Perú: 414 proceedings www. Indecopi.gob.co • Colombia: 352 proceedings www.supersociedades.gov.co • México: 14 asuntos jueces de distrito de personas naturales, 13 visitas de verificación, 12 sentencias de concurso mercantil, 8 convenios, 13 procesos de quiebra. (gaceta diputados 16 Nov 2012 al 31 de marzo de 2013) • Chile: New Law; • Guatemala, El Salvador.

9. IV. Alternatives for MSMEs´ Insolvency Proceedings • Simplification of business insolvency frameworks • MSMEs need alternative and ad-hoc insolvency regimes that have: • Shorter Time frames, less cumbersome, lighter evidentiary requirements, fewer procedural steps, more cost-efficient • *Simplification, debtor-in-possession as an incentive, plans: preservation of businesses, maximum return to creditors, satisfaction of claims with future income, treatment of personal guarantees, out of court solutions • Specific, special, functional solutions for MSMs. *The Insolvency of SMEs, José M. Garrido, Insolvency and Creditor –Debtor Regimes Initiative, The World Bank

10. IV. Alternatives for MSMEs´ Insolvency Proceedings • Discharge • ADRs available for MSMs (low costs) or hybrid proceedings