This report was prepared by Adolfo Rouillon, World Bank.
The maximum cost for creating and registering a mortgage or pledge is approximately US$200 (notary and registry fees included).
The debtor can challenge the creditor’s claim initiating a reverse lawsuit. In principle, this lawsuit does not stop the mortgage execution unless the debtor requests an injunction demonstrating prima facie the reasonability of his arguments. According to anecdotal evidence gathered in the field, debtors very rarely resort to the mentioned reverse lawsuit and injunction.
The number of bailiffs is regulated by the State. A qualification examination is required to obtain a bailiff license. Most of the bailiff’s procedural tasks can be (in fact, are) performed by assistants. The regulatory authority encourages competition between bailiffs, ensuring that in each territory at least two bailiffs are licensed and available.
The ICR ROSC 2001-2002 considered that the insolvency environment was confusing because three versions of the enterprise liquidation law (of years 1992, 1997 and 2001) were simultaneously in effect—the two oldest versions being applicable to bankruptcy proceedings opened prior to 2001 and 1997.
Though it is hard to determine a single cause of this restricted use of reorganization, key players interviewed mentioned several factors, including: (i) a majority of 75 percent of all liabilities—as required by law—is hard to obtain in most cases; (ii) debtors typically resort to reorganization too late; (iii) in the majority of reorganization cases, the debtor enterprise is no longer viable; (iv) too many formal restrictions established by the law.
Including the dissenting creditors, provided that a legally defined majority of creditors subscribed the restructuring agreement