The Colombian insolvency system has been consolidating a series of regulatory developments aimed at solving the biggest problem of businessmen in crisis: the lack of access to financing. Although Law 550 of 1999 provided in its Article 47 a gaseous formula for the "management and obtaining resources from second-tier banks"In fact, the process began with Law 1116 of 2006, which brought rules that encourage creditors already exposed to provide new resources to the insolvent party. Indeed, Article 41, paragraph 6, allows creditors who provide financing or undertake to do so, to move up in the priority ranking to pari passu The tax debts of the first class are paid on a one-to-one basis, i.e., each new peso allows one old peso to be moved up one class.

In a recent decision, dated March 27, 2024, the Superintendence of Corporations had the opportunity to reiterate its line of decision according to which this alteration of the priority for financing is a different assumption from the one regulated by the first paragraph of the mentioned rule, which allows the modification of the order of payments due to other type of advantages, for which a series of requirements must be exhausted, such as the agreement having obtained a majority of 60% of votes in favor. The decision adopted reaffirms that actual or potential financing cannot be conditioned on qualified majorities. It would be frankly unreasonable for access to fresh resources -again, the main problem of the debtor in insolvency proceedings- to be held hostage by reluctant, opportunistic or possibly interested creditors in the liquidation (holdout problem). This pure and simple financing does not require judicial authorization, but if it is intended to provide a guarantee, the intervention of the insolvency judge is required (Article 17 of Law 1116 of 2006).

The next step was taken by Decree 1749 of 2011, today included in the Sole Decree 1074 of 2015, articles 2.2.2.2.14.2.1 and following. It deals with the financing of the insolvent party in the context of insolvency of group of companies. This regulation facilitates that companies of the same group, including those immersed, in turn, in bankruptcy proceedings, provide resources to others in identical procedural situation. This type of operation is heavily intervened, unlike the one described above; it requires the express authorization of the judge and nomination of the promoter or liquidator of the candidate lender. The judge must look after the interests of all parties involved and the operation must seek to ensure the survival of the borrower, or increase the value of its assets or of the insolvency estate. According to these rules, it is feasible for a company in insolvency to grant pure and simple financing to another company of the same group, to provide a guarantee on its own assets in favor of the company in need of resources, or to extend a personal guarantee for its benefit, always with judicial authorization.

The third regulatory milestone was brought by the emergency regulation of 2020, now substantially included in Law 2437 of 2024. It is a regime very similar to the bankruptcy financing regime of the US system.Debtor in Possession -DIP- FinancingThe rules contained in Article 4 of the above-mentioned statute facilitate the granting of guarantees on free assets of the debtor, or on assets subject to other security interests, either secondarily or by displacing them. These rules, contained in Article 4 of the aforementioned statute, facilitate the granting of security over free assets of the debtor, or over assets subject to other securities, either in the second degree or displacing the original secured creditor altogether, provided that reasonable protection is granted to the debtor's claim. The latter is extremely useful, for example, in the presence of over-collateralized creditors, since it permits the release of valuable assets by court order for the procurement of new resources.