Venezuela has two insolvency procedures, the moratorium procedure (atraso) and the bankruptcy procedure (quiebra). Moratorium proceedings may be filed only voluntarily by the company. Bankruptcy proceedings may be filed voluntarily or involuntarily.
The existing Coronavirus (Covid-19) situation has not introduced any exceptions to insolvency procedures in Venezuela.
A company that needs to delay or defer payment of its debts may request a commercial court seated in the domicile of the company to authorize an amicable liquidation of the company. The company may file for moratorium proceedings only if the company’s assets are greater than its liabilities. Moratorium proceedings automatically stays all collection claims against the company but may only be granted for one year (but can be exceptionally extended for an additional year).
Voluntary or involuntary filing for bankruptcy proceedings require cessation of payments by the company (meaning that the company has fail to pay its debts when due). The bankruptcy proceeding automatically stays all collection claims against the company. A company that has been declared in bankruptcy is no longer able to manage its business, transfer it assets or incur in new liabilities. Management is transferred to a receiver during the bankruptcy proceedings.
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