The Colombian government adopted some emergency measures in economic matters to try to mitigate the negative impact of the covid-19 pandemic on companies and the employment they generate. The measures include the creation of credit lines, the partial payment to the general pension system, the extension of the deadlines for the presentation and payment of tax obligations, and the creation of an express mechanism for the refund of taxes.

Regarding insolvency, the Government issued decrees 560 and 772 of 2020, which contain measures to make the insolvency regime regulated in Law 1116 of 2006 more flexible. Without going into detail, alternatives were sought to allow quicker access to procedures of reorganization and reduce the times of these processes, as well as to simplify the liquidation procedures, in order to help the survival of companies with risks of illiquidity. These important steps have already begun to bear some fruit, as discussed below.

According to the figures published by the Superintendency of Companies in the “insolvency report after March 31, 2020” and in the “insolvency map for the first semester of 2020”, with a cut-off to September 24 of the current year, the number The number of requests made under Decree 772 (294) exceeds those that have been made following the provisions of Law 1116 (239). To this must be added the requests submitted under the guidelines of Decree 560 (91), which shows a noticeable preference of businessmen to use the mechanisms created by the Government in response to the pandemic.

Additionally, the flexibility of the requirements and procedures has caused the number of requests that are approved by the entity to increase compared to the immediately previous year, which means that the measures that seek to allow more expeditious access have been effective. easy to reorganization processes. In the words of the Superintendent Juan Pablo Liévano, “it shows how the Entity has been acting quickly and efficiently, for the benefit of the business sector that has been affected by the covid-19 crisis, and to apply the emergency reorganization regulations, all this in order for the insolvency processes and procedures to be expeditious and thus contribute to the preservation of the company and employment”.

The ghost of new closures and some outbreaks of the pandemic is still present in the environment, but it is expected that the worst period has already passed, so the figures presented by the Superintendency are encouraging. To these must be added those of jobs created in August (1.3 million according to Dane), which together allow us to think that the economic recovery began.

Although the increase in insolvency applications is not an encouraging figure per se, it shows the willingness of employers to take the measures within their power to give continuity to their businesses and to preserve jobs. This include gambling companies which has adopted the most mechanism presented by the government, as the access to credit lines and money lending is not easy for the operators but their willing to keep up their companies and employees is bigger.

Government support is a cornerstone in this process and the measures adopted are beginning to show a positive impact on the recovery of economic activity.

These steps are important, but it is still necessary for the Government to monitor the results obtained in this stage of the reopening of businesses and continue to adopt measures that provide effective mechanisms for companies to survive during these tough times of economic distress.