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Insolvency in Colombia for creditors: reorganisation under Ley 1116, the 2024 reforms, the stay on collection and liquidation

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

Companies and branches of foreign companies become insolvent before the Superintendencia de Sociedades acting as a judge; reorganisation opens on cessation of payments (two or more debts over 90 days to two or more creditors, at least 10 percent of liabilities) or imminent inability to pay, and from the opening no collection case can start or continue. The reorganisation agreement must be reached within four months by an absolute majority of votes from at least three of five creditor classes; post opening debts are administration expenses paid first. Ley 2437 de 2024 made the pandemic era tools permanent: three month negotiated reorganisations, chamber of commerce mediation, rescue by creditors injecting capital, and mandatory fast track procedures for debtors with assets up to 5,000 minimum wages (COP 8,754,525,000 in 2026).

USD figures use the TRM (tasa representativa del mercado) of COP 3,158.43 per US dollar, valid 24 to 26 October 2026, from the official TRM series published by the Superintendencia Financiera on the national open data portal. Peso figures in UVB use the 2026 UVB of COP 12,110 (Res. MinHacienda 3488 de 2025, as reported by the Ministry of Transport); figures in minimum wages use the 2026 monthly minimum wage of COP 1,750,905 (Decreto 1469 de 2025). Conversions are for orientation only.

Key facts

Corporate insolvency statute	Ley 1116 de 2006 textLey 1116 de 2006, as of 2026-10-26 · in force
Days overdue for the cessation of payments test	90 daysLey 1116 de 2006 art. 9, as of 2026-10-26 · in force
Minimum share of liabilities overdue for the cessation test	10 %Ley 1116 de 2006 art. 9, as of 2026-10-26 · in force
Term to reach a reorganisation agreement	4 monthsLey 1116 de 2006 art. 31, as of 2026-10-26 · in force
Maximum duration of a negotiated reorganisation or chamber of commerce recovery	3 monthsLey 2437 de 2024 art. 6 and 7, as of 2026-10-26 · in force
Asset ceiling for small insolvency procedures 2026 (5,000 minimum wages)	8754525000 COPLey 2437 de 2024 art. 18 and 19, as of 2026-10-26 · in force
Insolvency judge for companies and foreign branches	Superintendencia de Sociedades textLey 1116 de 2006 art. 6, as of 2026-10-26 · in force

The rule

1. The insolvency regime protects credit and preserves viable businesses through reorganisation and judicial liquidation. It applies to merchants who are individuals and to private or mixed legal entities with permanent business in Colombia, including branches of foreign companies. The Superintendencia de Sociedades, exercising judicial functions, hears cases of all companies, sole proprietorship companies and branches of foreign companies; circuit civil judges hear the rest.Ley 1116 de 2006, Art. 1, 2 and 6, 2006-12-27 official text · verified 2026-10-26

2. A debtor is in cessation of payments if it has failed for more than 90 days to pay two or more obligations owed to two or more creditors, or faces at least two executive claims by two or more creditors, provided the total is at least 10 percent of its liabilities. Reorganisation is also available for imminent inability to pay (not for individual merchants). The debtor must keep regular accounts and be current on pension obligations.
Example: Liabilities of COP 2,000,000,000 with two debts to two creditors more than 90 days overdue totalling COP 250,000,000 (12.5 percent): the test is met. / About US$633,226.00 of liabilities and US$79,153.25 overdue.Ley 1116 de 2006, as amended by Ley 1429 de 2010, Art. 9 and 10, 2006-12-27 official text · verified 2026-10-26

3. From the filing, management may not amend the bylaws, grant or enforce security on the debtor's assets, set off, pay or settle claims outside the ordinary course without the judge's authorisation; acts in breach are ineffective from admission and managers face removal, joint liability and fines up to 200 minimum wages. The judge may authorise early payment of small claims totalling up to 5 percent of external liabilities.Ley 1116 de 2006, Art. 17, 2006-12-27 official text · verified 2026-10-26

4. From the opening of reorganisation no executive or collection claim may be admitted or continued; pending ones are sent to the insolvency judge and their defences become objections. The promoter prepares the ranking of claims and voting rights; creditors have 10 days to object.Ley 1116 de 2006, Art. 19 and 20, 2006-12-27 official text · verified 2026-10-26

5. The judge sets four months, not extendable, to reach a reorganisation agreement approved by creditors holding at least an absolute majority of admitted votes, with favourable votes from at least three of the five classes (employees, public entities, financial institutions, internal creditors, other external creditors), or two of three where there are only three.Ley 1116 de 2006, as amended by Ley 1429 de 2010 art. 38, Art. 31, 2006-12-27 official text · verified 2026-10-26

6. Obligations arising after the opening are administration expenses with priority over claims in the agreement or liquidation and may be collected coercively. Ley 2437 de 2024 lets the debtor obtain credit for ordinary business during negotiations with that priority without court authorisation and, if needed, with court authorised security over unencumbered assets.Ley 1116 de 2006 art. 71; Ley 2437 de 2024 art. 4, Ley 1116 art. 71; Ley 2437 art. 4, 2024-12-12 official text · verified 2026-10-26

7. Ley 2437 de 2024 made Decreto Legislativo 560 de 2020 largely permanent: debtors may negotiate a reorganisation agreement out of court in up to three months and submit it for confirmation; chambers of commerce may run business recovery mediation for up to three months with the effects of Ley 1116 art. 17; a creditor may avoid liquidation of a debtor with negative equity by offering new capital; debtors with assets up to 5,000 minimum wages must use an abbreviated reorganisation or a simplified liquidation; and liquidation by adjudication was abolished.
Cost to do it: Small insolvency ceiling 2026: assets up to COP 8,754,525,000 (US$2,771,796.43).Ley 2437 de 2024 (Diario Oficial 52.968 of 12 December 2024), Art. 1, 5, 6, 7, 18, 19 and 21, 2024-12-12 official text · verified 2026-10-26 · changed: Ley 2437 de 2024 (12 December 2024) incorporated Decreto 560 de 2020 tools as permanent law, created small insolvency procedures and repealed Ley 1116 art. 37 and 38.

8. Judicial liquidation opens immediately in listed cases (debtor request, abandonment of the business, unpaid pension, withholding or social security obligations not cured within the judge's term of up to three months, joint request with creditors holding 50 percent of external liabilities, among others). It dissolves the company, removes management, terminates contracts not needed to preserve assets and employment contracts, and terminates security trusts, with assets returned to the estate.Ley 1116 de 2006, Art. 47, 49 and 50, 2006-12-27 official text · verified 2026-10-26

9. Title III of Ley 1116 regulates cross border insolvency: cooperation with foreign courts and representatives, access for foreign representatives and protection of the debtor's assets, following the UNCITRAL Model Law approach.Ley 1116 de 2006, Art. 85, 2006-12-27 official text · verified 2026-10-26

Worked example

A foreign supplier is owed COP 250,000,000 (US$79,153.25) by a Colombian distributor that files for reorganisation. Its pending executive case is sent to the Superintendencia de Sociedades and attachments come under the insolvency judge.
It checks the promoter's ranking and objects within 10 days if its claim or vote is wrong; as an external creditor it votes in the other external creditors class.
Goods it supplies after the opening are administration expenses, paid ahead of the agreement and collectable by enforcement.

Step by step

Monitor counterparties' chamber of commerce certificates and the Superintendencia de Sociedades for filings.
On an opening, file or check your claim, its ranking and votes; object within the 10 day window.
Do not enforce security or set off without the judge's authorisation.
Negotiate the agreement within the four month term; consider new financing with administration expense priority.
In liquidation, file the claim within the terms set in the opening order and watch the asset sale in block or as a going concern.

Common traps

Set off or enforcement of guarantees by a creditor after the filing can be ineffective and expose it to fines.
Security trusts granted by the debtor terminate in liquidation and the assets return to the estate.
Small debtors (assets up to 5,000 minimum wages) go only through the abbreviated or simplified procedures, with tighter timelines and less room for objections.

Sources

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