Intersection of Bankruptcy Law and Labor Law. Challenges Regarding Union Jurisdiction and Workers with Enhanced Job Security

Abstract

In Colombia, Law 1116 of 2006 is the special regulation that governs the insolvency regime, in its modalities of reorganization and judicial liquidation, regulated by the regulations compiled in Single Regulatory Decree 1074 of 2025 and the recent Law 2437 of December 12, 2024, which incorporated Legislative Decree 560 of 2020 as permanent legislation, except for articles 1, 3, 7, 15, 16, Section 3 of Paragraph One of article 8 and Title III of the aforementioned decree. As well as Legislative Decree 772 of 2020, except for articles 1, 7, 8, 13, 15, 16, and 17.

The judicial liquidation process seeks to protect credit, always under the criterion of adding value, to fulfill its purpose, which is to achieve a prompt and orderly liquidation, seeking to leverage the debtor’s assets for the benefit of its creditors, and seeking to honor the company’s liabilities, up to the extent of the assets. This is done by applying, among others, the principles of equality and objective and subjective universality that govern bankruptcy proceedings.

The described purpose is sometimes not achieved when the bankrupt’s assets are used to pay creditors whose contracts remain in effect, even when the insolvency statute mandates the termination of all employment contracts without any judicial or administrative authorization. When this occurs, certain legal concerns arise, including determining whether, given that the company is undergoing judicial liquidation, the right to union association enshrined in the Colombian Political Constitution prevails, or, on the contrary, the right to equality enshrined in the same constitutional legal system should prevail.