II. The Scope of Law 141-15

Law 141-15 applies to any local or foreign individual trader or legal entity domiciled or with a permanent presence in the DR, with the following exceptions:

• Companies in which the Dominican State holds majority participation or control.
• Financial intermediation entities governed by the Monetary and Financial Law 183-02, which follow the special dissolution regime of that law.
• Participants in the securities market, whose insolvency is governed by the securities legislation (Law 249-17, which replaced Law 19-00) (see Capital Markets).

III. The Officials Established by Law 141-15

All steps in restructuring and judicial liquidation proceedings are conducted by the specialized courts created by Law 141-15, assisted, within statutory limits, by specialized officials: the verifier (verificador), the conciliator (conciliador), the liquidator (liquidador), expert auxiliaries, creditor advisors and employee advisors. Verifiers, conciliators and liquidators must be accredited before the competent authority.

IV. Competent Courts for Restructuring and Judicial Liquidation

Law 141-15 created the Jurisdiction of Restructuring and Liquidation as the only courts competent to apply its provisions to individuals and legal entities, mirroring the divisions and composition of the ordinary courts. Any judicial or extrajudicial action or proceeding of restructuring or judicial liquidation must be initiated before the competent Court of First Instance of Restructuring and Liquidation of the debtor’s domicile.

V. The Restructuring Request

Any creditor holding a claim of at least fifty (50) minimum wages against the debtor may request the debtor’s restructuring. The request is filed in writing, duly reasoned, before the competent court. The debtor itself, and other legitimated persons, may also request restructuring on the grounds allowed and proven under the law, including imminent or actual cessation of payments.

The 50-minimum-wage threshold makes the restructuring request a potent creditor tool; debtors anticipating distress are usually better served by filing voluntarily, which preserves control of the narrative and the timeline before the conciliator.

VI. The Moratorium (Stay) of Actions against the Debtor

Once the court accepts the restructuring request, a moratorium suspends the following:

• All judicial, administrative or arbitral actions of patrimonial content against the debtor.
• Any enforcement proceeding, eviction or attachment by creditors against the debtor’s property.
• Any disposition of the business’s assets, except those permitted by law.
• The accrual of conventional and judicial interest, including penalty clauses, extending to guarantors and co-debtors.
• Payments of obligations contracted before the date of the restructuring request.
• Enforcement proceedings for tax credits.

The moratorium binds garnished third parties. By exception, the stay does not apply to: mandatory child and family support payments where the debtor is an individual; labor claims under the Labor Code or social security legislation; and payments indispensable to the ordinary operation of the business, exceptionally determined and justified before the conciliator.

VII. Approval and Homologation of the Restructuring Plan

Once the conciliator drafts the proposed restructuring plan, it is submitted to the creditors for approval by the majorities required by Law 141-15. Upon approval, the plan is deposited with the court for homologation and made available to the interested parties.

VIII. Execution of the Restructuring Plan

Judicial approval of the plan automatically ends the conciliation and negotiation phase. During execution, the conciliator reports to the court every three (3) months on compliance and on the exercise of its functions, and the debtor reports monthly to the conciliator on performance and on the measures established in the plan.

IX. The Simplified Restructuring Procedure

Law 141-15 provides a simplified, less restrictive restructuring procedure suited to small businesses, available where the debts do not exceed ten million Dominican pesos (RD$10,000,000). The verifier’s report determines whether the simplified procedure applies.

X. Judicial Liquidation

The courts created by Law 141-15 order the commencement of judicial liquidation, which may be requested by:

• The debtor, at any time.
• The verifier, where the debtor or any obligated person withholds information or obstructs its functions, or where the verifier’s report finds restructuring unviable.
• The conciliator, where the debtor fails to cooperate during conciliation and negotiation, where restructuring proves unviable, or where the terms for approval of the plan have lapsed.

If the court orders judicial liquidation, it must appoint a liquidator within three (3) days of its decision. Once in office, the liquidator may require the debtor to take the actions necessary to preserve the rights involved, may execute binding contracts on behalf of the debtor company, and displaces the debtor’s management in the corporate governance of the business.

The liquidator prepares a liquidation plan based on the asset pool and the rights of employees and creditors over the assets, respecting the ranking and classification of creditors established by law and the applicable general rules.

All decisions of the courts and of the court-appointed officials are subject to the legal remedies and appeals provided by the law.

Secured, labor and tax claims follow a statutory ranking that often surprises foreign lenders; credit and collateral structures for Dominican borrowers should be stress-tested against the Law 141-15 waterfall at the term-sheet stage.

XI. Cross-Border Cooperation and Recognition of Foreign Insolvency Proceedings

Dominican law recognizes insolvency proceedings initiated or to be initiated in other jurisdictions and provides for cooperation with foreign courts and recognition of foreign creditors, following the model of international practice.

The provisions applicable to Dominican insolvencies apply equally to foreign proceedings recognized by the Courts of Restructuring and Liquidation. Once the statutory requirements are met, the court must decide on a request for recognition of a foreign proceeding within fifteen (15) days.

This publication is provided for informational purposes only and not as legal advice. Any transaction related to any of the described aspects shall require advice and be specifically consulted with the Firm in advance. © Arthur & Castillo. All Rights Reserved. Next