From a corporate and financial point of view, managers in Argentine companies (as in all companies globally) are facing difficult times. This is an unprecedented crisis that is affecting not only the companies’ financial situation, but most importantly, their cash flow and operations.
The ABL has proven to be efficient for the successful financial restructuring of a large number of operative viable companies of all sizes during the last decades. However, the ABL and the insolvency laws in general, are not able to provide relief to the companies’ operational deficit caused by the reduction of their cash flow as a consequence of the general consumption depression resulting from the social restrictions worldwide. Such relief can only be obtained from governmental supportive measures (tax benefits and reductions, etc.) and loans. In this regard, Argentina has pending an amendment to the ABL and to the Argentine Central Bank rules for the development of DIP financing.
Argentina has abrogated long ago the qualification of the debtor managers’ conduct in insolvency proceedings. However, there are several grounds for managers’ liability in insolvency.
When a debtor becomes insolvent, the directors’ duties in relation to the creditors are strengthened. Pursuant to the ABL, the members of the board of directors and representatives that willfully provoked, facilitated, allowed or aggravated the debtor’s economic and financial situation or its insolvency may be held liable for any damages arising from the debtor’s bankruptcy. Certain scholars have concluded that any express decision or omission of the directors that permit the continuation of the insolvent debtor’s operations without adopting any measures directed to address this situation (including the filing for an insolvency proceeding, if required), may result in corporate liability under the Argentine General Business Companies Law No. 19,550 general grounds for directors’ liability. Scholars and recent case law agree that liability requires willful misconduct.