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Insolvency liquidation of a Chilean company: voluntary filing, creditor petitions, the liquidator, creditor ranking and the end of debts

Last verified: 2026-10-26 · Status: Stable

A Chilean company that cannot pay its debts can file for voluntary liquidation in court, or a creditor can force it when it stops paying an enforceable debt, posting a 100 UF deposit. Once the liquidation order is issued the company loses control of its assets to a liquidator, creditors have 30 days to file claims, and small estates of up to 5,000 UF are sold through a simplified procedure. Workers and social security rank in the first class of creditors, and when the procedure ends, unpaid balances of prior debts are extinguished by law, although guarantors remain liable.

USD figures use the Central Bank exchange rate of CLP 986.58 per US dollar published in the Diario Oficial for 23 October 2026 (CNCI Chapter I, Title VII). UF and UTA values are the SII figures for October 2026 (UF 41,221.08 on 26 October; UTA CLP 865,812). Conversions are for orientation only.

Key facts

Deposit a creditor must post to petition for forced liquidation	100 UFLey Nº 20.720, art. 118, as of 2026-10-26 · in force
Days for creditors in Chile to file claims after publication of the liquidation order	30 daysLey Nº 20.720, art. 129 Nº 7, as of 2026-10-26 · in force
Expected proceeds at or below which the simplified sale applies	5000 UFLey Nº 20.720, art. 203 letter b), as of 2026-10-26 · in force
Days for the court to issue the order on a complete voluntary filing	3 daysLey Nº 20.720, art. 116, as of 2026-10-26 · in force
Maximum years of severance with first class priority	11 yearsCódigo Civil, art. 2472 Nº 8, as of 2026-10-26 · in force

The rule

1. A debtor company may ask the competent civil court for its voluntary liquidation, attaching a list of its assets, their location and liens, proof of title for registered assets, the assets excluded by law, pending lawsuits, a statement of debts with the creditors' details, a list of workers with amounts owed and the status of social security contributions, and its accounting records where it keeps full accounts. If the filing is complete, the court issues the liquidation order within three days.
Cost to do it: Court and liquidator costs paid from the estate; legal fees for the filing.Ley Nº 20.720, reorganization and liquidation of companies and persons, Art. 115 and art. 116, 2014-01-09 official text · verified 2026-10-26

2. Any creditor may sue for forced liquidation if the company stops paying an enforceable, overdue obligation arising from its business with that creditor; if it has two or more overdue enforceable titles from different obligations with at least two enforcement suits started and has not offered sufficient assets within four days of the demands; or if the company and its managers cannot be found and have closed their offices without leaving an empowered agent. The petition must attach a bank deposit of 100 UF for initial costs and liquidator fees, which becomes a first class claim of the petitioner if liquidation is ordered; the petitioner may also name a monitor (veedor) whose fees, borne by the petitioner, cannot exceed 100 UF.
Cost to do it: Deposit of 100 UF, CLP 4,122,108 at the 26 October 2026 UF, plus up to 100 UF for a monitor.
Example: Creditor petition deposit: CLP 4,122,108. / The 100 UF deposit is about US$4,178.Ley Nº 20.720, reorganization and liquidation of companies and persons, Art. 117 and art. 118, 2014-01-09 official text · verified 2026-10-26

3. The court checks the petition within three days and sets a hearing on the fifth day after notice to the debtor. At the hearing the debtor may pay the claim and costs into court, accept the petition, opt for a judicial reorganization, or oppose it; in each case it must give details of its three largest creditors, failing which the court issues the liquidation order.
Cost to do it: Legal fees for the hearing; payment of the claim if the debtor chooses to consign it.Ley Nº 20.720, reorganization and liquidation of companies and persons, Art. 119 and art. 120, 2014-01-09 official text · verified 2026-10-26

4. The liquidation order appoints provisional principal and alternate liquidators, orders the seizure of all assets, books and documents, consolidates pending lawsuits, warns the public not to pay or deliver goods to the debtor, and gives creditors in Chile 30 days from publication to file their claims. From the order, the debtor loses by law the administration of its assets, which passes to the liquidator; later acts on those assets are void, although the debtor keeps ownership.
Cost to do it: Liquidator's fees and procedure costs rank as first class claims against the estate.Ley Nº 20.720, reorganization and liquidation of companies and persons, Art. 129 Nº 3, 5, 6 and 7, and art. 130, 2014-01-09 official text · verified 2026-10-26

5. Assets are sold through a simplified or summary procedure, with listed securities sold on the exchange and other assets at auction by a bankruptcy auctioneer, when the liquidator reports at the first creditors meeting that the likely proceeds will not exceed 5,000 UF, when that meeting fails for lack of quorum or is attended by 20 percent or less of voting liabilities, or when the meeting so decides.
Cost to do it: Auction costs; threshold of 5,000 UF, CLP 206,105,400 at the 26 October 2026 UF.
Example: An estate likely to fetch less than CLP 206,105,400 goes to the simplified sale. / The 5,000 UF threshold is about US$208,909.Ley Nº 20.720, reorganization and liquidation of companies and persons, Art. 203 and art. 204, 2014-01-09 official text · verified 2026-10-26

6. First class claims include, in order, court costs in the general interest of creditors, the costs of the liquidation and asset realization and loans taken by the liquidator for them, then workers' wages, family allowances, the notice indemnity of Labor Code art. 163 bis Nº 2 up to 90 UF, unpaid social security contributions and legal maintenance up to 120 UF. Workers' statutory and contractual severance accrued when claimed also ranks in the first class up to three minimum monthly wages per year of service, with a limit of 11 years; the excess is unsecured.
Cost to do it: Worker claims are paid before ordinary creditors and shareholders.
Example: The 90 UF cap on the notice indemnity is CLP 3,709,897 at the 26 October 2026 UF. / 90 UF is about US$3,760.Código Civil, DFL Nº 1 of 2000, Art. 2472 Nº 1, 4, 5 and 8, 2000-05-30 official text · verified 2026-10-26

7. Once the order declaring the liquidation ended is final, unpaid balances of obligations the debtor incurred before the procedure began are extinguished by law, except legal maintenance and obligations arising from civil or criminal wrongs, and unless the court rules otherwise in an incident under art. 169 A. The extinction does not affect creditors' rights against guarantors, joint or subsidiary co debtors, endorsers or third parties who gave security, who cannot invoke it.
Cost to do it: No cost; guarantees given by the foreign parent survive.Ley Nº 20.720, reorganization and liquidation of companies and persons, Art. 254 and art. 255, 2014-01-09 official text · verified 2026-10-26

8. The board of an S.A. that has stopped paying one or more obligations, or that is subject to a liquidation order, must call a shareholders meeting within 30 days to report fully on its legal, economic and financial position. In liquidation, creditors of any class rank ahead of shareholders' claims from a capital reduction, and shareholders' withdrawal rights are suspended until creditors are paid.
Cost to do it: Meeting costs; no capital back while creditors are unpaid.Ley Nº 18.046, Ley sobre Sociedades Anónimas, Art. 29, art. 69 and art. 101, 1981-10-22 official text · verified 2026-10-26

Point	Voluntary	Forced
Who files	The debtor company	Any creditor with a qualifying ground
Up front cost	Legal fees	Bank deposit of 100 UF (CLP 4,122,108)
Court timing	Order within 3 days if complete	Review in 3 days; hearing on the 5th day after notice
Debtor options	Not applicable	Pay into court, accept, reorganize or oppose

Voluntary versus forced liquidation (Ley Nº 20.720 art. 115 to 120).

Worked example

A foreign owned Chilean SpA cannot pay its suppliers. One unpaid supplier with an overdue invoice that is enforceable files for forced liquidation, posting a 100 UF deposit, CLP 4,122,108 or about US$4,178 (Ley Nº 20.720 art. 117 and 118).
At the hearing the SpA does not pay or oppose, so the court issues the liquidation order; the liquidator seizes the assets, the board loses control, and creditors have 30 days from publication to file claims (art. 129 and 130). The liquidator must also notify every worker within six business days that their contracts ended on the date of the order (Labor Code art. 163 bis).
The liquidator expects the assets to fetch less than 5,000 UF, about US$208,909, so they are sold through the simplified procedure (art. 203). Workers' wages, the notice indemnity up to 90 UF and contributions are paid first (Código Civil art. 2472).
When the procedure ends, the SpA's unpaid prior debts are extinguished, but a parent guarantee given to the company's bank remains enforceable against the parent (art. 255).

Step by step

1. When cash runs short, the S.A. board must call a shareholders meeting within 30 days of the first payment default (Ley Nº 18.046 art. 101).
2. Consider a reorganization procedure before liquidation if the business can be saved.
3. For a voluntary filing, assemble the asset, title, debt, litigation and worker lists and the accounts (Ley Nº 20.720 art. 115).
4. After the order, cooperate with the liquidator, who takes over assets and books (art. 130).
5. Check which parent guarantees survive the extinction of debts (art. 255).
6. Note that the SII termination still applies to the company's tax position.

Common traps

Capital reduction payments to shareholders before insolvency can be challenged, and creditors rank ahead of them (Ley Nº 18.046 art. 29).
The extinction of debts does not release guarantors, including a foreign parent (Ley Nº 20.720 art. 255).
From the liquidation order, any act by the company over its assets is void (art. 130).
Worker severance has priority only up to three minimum wages per year and 11 years; the excess is unsecured (Código Civil art. 2472 Nº 8).
Leaving offices closed with no empowered agent is itself a ground for forced liquidation (art. 117 Nº 3).

Sources

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