29 January 2024
Felipe Riedel, Claudia Pérez

Chilean Law No. 21,641 amends Law No. 20,720 on Insolvency and Bankruptcy. 

On December 30, 2023, Law 21,641 was published in the Chilean Official Gazette, amending Lawy 20720 on Insolvency and Bankruptcy. This amendment exempts certain contracts from the restriction to bring them to an early termination during the insolvency financial protection in judicial reorganization proceedings, and allows the operation of compensations with respect to obligations arising from such contracts once the liquidation resolution is issued in the liquidation proceedings.

Specifically, it amended Article 57 of Law No. 20. 720, excluding from the restriction to terminate early, demand early compliance or make effective the guarantees contracted invoking as a cause the initiation of a judicial reorganization proceeding, those contracts entered into by the debtor corresponding to sale and repurchase agreements, sale and repurchase agreements or other transactions in any title, right, act, contract, invoice, product or foreign currency, negotiable in domestic or foreign markets (“REPO transactions”), in which the debtor is an institutional investor.