The Life, Death and Resurrection of Secured Credits in the Colombian Bankruptcy Procedure

Abstract

Since 1991 Colombian constitutional doctrine and jurisprudence has granted labor and child support credits absolute preference over other types of credits. Articles 50 and 51 of Law 1676 gave senior preference to secured credits. The Constitutional Court in judgment C-145/18 considered that these articles were valid if an interpretation was established where the preference of secured credits was relational not absolute, in terms of articles 2488 and 2500 of the Civil Code. By accepting that, if there are sufficient assets in the debtor’s estate, the credits with collateral in an insolvency can be paid in preference to the credits with constitutional protection, the balance between constitutionally recognized credit preferences and those of contractual origin is restored, as was intended in Bello’s Civil Code.