Countries › Panama › Guide › 14. Disputes › Insolvency and creditor claims in Panama under Ley 12 de 2016: reorganisation, the financial protection stay, liquidation, clawback and cross border cases

Insolvency and creditor claims in Panama under Ley 12 de 2016: reorganisation, the financial protection stay, liquidation, clawback and cross border cases

Last verified: 2026-10-29 · Status: Stable

Ley 12 de 2016, in force since 2 January 2017, replaced Panama's old bankruptcy rules with reorganisation and liquidation before specialised circuit insolvency judges for merchants and commercial companies, excluding banks, insurers, securities entities and State entities. Reorganisation opens a financial protection stay that bars new executions and suspends secured enforcement, creditors verify claims within 20 days and the plan needs an absolute majority of creditors holding at least 66 percent of liabilities. A creditor seeking liquidation deposits B/.1,000, and a cross border title lets foreign representatives seek recognition and relief.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Insolvency law	Ley 12 de 2016 textLey 12 de 2016, as of 2026-10-29 · in force
Court for company insolvency	Circuit insolvency judges textLey 12 de 2016 arts. 21 and 23, as of 2026-10-29 · in force
Stay on new executions during reorganisation	Yes, from opening order to plan confirmation textLey 12 de 2016 arts. 36 and 39, as of 2026-10-29 · in force
Secured enforcement stayed	Yes, unless the judge authorises it textLey 12 de 2016 art. 42, as of 2026-10-29 · in force
Days for creditors to verify claims in reorganisation	20 daysLey 12 de 2016 art. 52, as of 2026-10-29 · in force
Reorganisation plan majority	Absolute majority of creditors holding at least 66% of liabilities textLey 12 de 2016 art. 67, as of 2026-10-29 · in force
Clawback period for listed acts before liquidation	365 daysLey 12 de 2016 art. 118, as of 2026-10-29 · in force
Cross border insolvency regime	Yes, recognition of foreign proceedings textLey 12 de 2016 arts. 210 to 241, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. The regime applies to individual merchants and commercial companies, registered or not, with a commercial domicile, branch, agency or establishment in Panama. It excludes public entities and companies 51 percent or more State owned, banks, insurers, entities regulated by the Superintendencia del Mercado de Valores and other entities with special resolution regimes, and public service companies under intervention.Ley 12 de 19 de marzo de 2016, arts. 3 and 5, 2016-03-19 official text · verified 2026-10-29

2. Circuit insolvency courts have exclusive jurisdiction over insolvency proceedings, and a Fourth Superior Court of the First Judicial District hears appeals. The law entered into force on 2 January 2017 and applies to proceedings started from that date.Ley 12 de 19 de marzo de 2016, arts. 17, 21, 23, 263 and 269, 2016-03-19 official text · verified 2026-10-29

3. The debtor, the creditors' meeting or a foreign insolvency representative may request reorganisation when the debtor has ceased payments, faces imminent insolvency or a foreseeable lack of liquidity.Ley 12 de 19 de marzo de 2016, arts. 27, 28 and 29, 2016-03-19 official text · verified 2026-10-29

4. From the opening order until the plan is confirmed, the financial protection stay bars new executive proceedings, executions, repossessions and evictions, suspends limitation periods, keeps contracts in force (they cannot be terminated for the filing) and suspends interest except on secured claims. New enforcement of security interests is barred and pending ones without auction are suspended, though the judge may allow them if operations are not affected. Labour claims continue but their execution is stayed.Ley 12 de 19 de marzo de 2016, arts. 36, 39, 40, 41 and 42, 2016-03-19 official text · verified 2026-10-29

5. Creditors have 20 days from the last publication of the opening order to verify their claims with supporting titles and any pledge or mortgage. The opening order is published for 5 consecutive days and calls national and foreign creditors.Ley 12 de 19 de marzo de 2016, arts. 36 and 52, 2016-03-19 official text · verified 2026-10-29

6. The reorganisation agreement needs the vote of an absolute majority of creditors representing at least 66 percent of total liabilities; if related creditors hold more than 50 percent of recognised claims, related and unrelated creditors vote separately with the same majorities. If no agreement is reached at the first meeting, negotiations run 10 days, extendable by up to 20.Ley 12 de 19 de marzo de 2016, arts. 63 and 67, 2016-03-19 official text · verified 2026-10-29

7. Liquidation is available when the debtor stops paying an obligation in an executive title arising from commercial acts, has three or more executions against it without sufficient assets, or hides, abandons or closes its business without an empowered agent. A creditor filing must deposit B/.1,000 in cash at the Banco Nacional de Panamá; the debtor gets 20 days to answer. A secured creditor may only file if the collateral is insufficient.
Cost to do it: Deposit B/.1,000 (US$1,000) for a creditor's liquidation petition.Ley 12 de 19 de marzo de 2016, arts. 80, 84 and 85, 2016-03-19 official text · verified 2026-10-29

8. Acts in the year before the liquidation order are void for the benefit of the estate if they are gratuitous or undervalued, grant security for prior debts, pay debts not yet due or give in payment for due debts; gratuitous acts in favour of relatives, shareholders, directors or managers are void if made in the previous four years.Ley 12 de 19 de marzo de 2016, arts. 118 and 119, 2016-03-19 official text · verified 2026-10-29

9. Administrative claims against the estate, including labour benefits, current national and municipal taxes and public utility charges, are paid first from unencumbered assets; other claims follow the ranking of the Código Civil, and secured creditors are paid from their collateral and share as unsecured creditors for any shortfall.Ley 12 de 19 de marzo de 2016, arts. 178 to 183, 2016-03-19 official text · verified 2026-10-29

10. A cross border title lets foreign representatives access Panamanian courts directly, request recognition of a foreign main or non main proceeding and obtain relief, with direct cooperation between courts.Ley 12 de 19 de marzo de 2016, arts. 210 to 241, 2016-03-19 official text · verified 2026-10-29

Step	Time	Article
Publication of opening order	5 consecutive days, within 5 days of the order	36
Creditors verify claims	20 days from the last publication	52
Negotiation if no deal at the first meeting	10 days, extendable by up to 20	63
Approval meeting	Within 10 days after negotiations end	63
Majority	Absolute majority holding at least 66 percent of liabilities	67

Reorganisation timeline under Ley 12 de 2016.

Worked example

A Panamanian retailer owes B/.8,000,000 (US$8,000,000), of which a bank holds B/.3,000,000 secured by a mortgage.
The retailer files for reorganisation; the opening order stays the bank's foreclosure and all new collection suits.
The plan passes if an absolute majority of creditors holding at least B/.5,280,000 (66 percent) votes for it.

Step by step

Watch publications of opening orders and verify your claim within 20 days of the last publication.
Document collateral and its commercial value with your claim.
If a debtor stops paying an executive title, consider a liquidation petition with the B/.1,000 deposit.
Review payments and security granted to you in the year before a liquidation for clawback risk.

Common traps

Banks, insurers and securities firms are outside this law; their failures follow special regimes.
Security granted for old debts in the year before liquidation is void for the estate.
Interest stops running on unsecured claims during the stay unless the plan restores it.
Labour, current taxes and utilities rank ahead of ordinary creditors as administrative claims.

Sources

← Investment treaty arbitration with Panama: ICSID since 1996, the US Trade Promotion Agreement, bilateral treaties and arbitration clauses in State contractsClaims against the Panamanian State: administrative appeals, the two month silence rule, the contentious administrative jurisdiction and civil cases against the State →

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