Technology Applied to Debt Restructuring Proceedings

Due to the outbreak of COVID-19 and the uncertainty in the duration of the Social, Preventive and Mandatory Isolation, a First Instance Court highlighted the need to find alternative means to in-person procedures to avoid the paralysis of restructuring proceedings. (“Cofina Agro Cereales S.A. -restructuring proceedings”, First Instance Commercial Court N° 18).

In an innovative decision, which follows the trend of some provincial courts such as Mendoza and Santa Fe, the court held that there are no impediments to implement a credit verification process via remote access, through the filing of electronic briefs and documents, since section 32 of the Restructuring and Bankruptcy Law establishes that credit verification must be requested “in writing”, but it does not restrict the formality to paper format. This can be implemented as long as it is possible to guarantee: (i) the authorship, through a system of digital signature or similar; and (ii) the completeness and inalterability of the documents submitted.  These requirements, the ruling held, arise from  Law No. 26.685 (which allows the use of electronic judicial files, electronic documents, digital and electronic signatures and electronic communications and domiciles in all judicial and administrative proceeding before the Judiciary) and from Law No. 25.506 on digital signature (specially where it establishes that digital documents comply with the written format requirement and that digitally signed documents, as well as the ones reproduced in digital format and signed digitally, are regarded as an original document and are valid as evidence). Likewise, the Argentine Civil and Commercial Code allows legal acts to be represented in any means and establishes that the signature of a person is regarded as valid if a digital signature is implemented, as long as it guarantees the authorship and integrity of the instrument (sections 286, 288 and 319).

In this regard, the ruling identifies the following advantages in the digitalization of the files: (i) preservation at low cost (compared to paper files that courts do not have enough space to store); (ii) it facilitates searches and work on documents; (iii) avoids the indiscriminate use of paper, reducing the cost of the proceedings and protecting the environment; and (iv) allows a broader control from the debtor and other concurrent creditors, since every file can be also visualized via remote access by everyone that has a legitimate interest for that purpose.

In second place, the ruling highlights that the development and implementation of a remote and digital, or not-in-person, verification system should be developed by the Professional Council of Economic Sciences of the Autonomous City of Buenos Aires, which is the organization that regulates, orders and grants professional registration to economic science professionals, among which are the trustees in restructuring proceedings – who have been assigned the duty to receive, systematize and preserve the verification requests. As a result, the court ordered the Council to urgently develop a platform that allows non-presential verification, that grants: (i) certainty on the authorship of those who verify credits; (ii) the trustworthiness and inalterability of the content of the requests, for both the verification requests and the attached documents; (iii) a reliable record for solicitors that file requests, which must sufficiently prove the date and time in which the credit verification request has been filed; (iv) the unaltered preservation of the documents received; (v) easy and widespread availability for anyone interested in filing a request to verify a credit, with or without legal representation; (vi) the proper organization of each of the creditor´s files; (vii) and the availability to monitor the files by each person entitled by law, as well as the court, from the period in which they are allowed to challenge the requests.

Finally, the resolution also requires the Professional Council to elaborate a protocol for the submission of filings to the system. However, so far, the Council has stated that it cannot comply with the court order, so it was ordered to comply within a 60-day term, under threat of imposing court fines.