Discharge is the effect of the termination of a bankruptcy liquidation proceeding, according to which the balances of the debtor’s obligations that could not be paid during such proceeding are extinguished for all legal purposes, releasing the debtor from the obligation to pay such unpaid balances. The idea behind the discharge is to grant the debtor a “fresh start” after its insolvency liquidation.

Law 20.720, in its current version, provides in Article 255 that once the resolution declaring the end of the liquidation bankruptcy proceeding is final or enforceable, the unpaid balances of the obligations contracted by the debtor prior to the beginning of the liquidation bankruptcy proceeding will be deemed extinguished by operation of law (automatically) and for all legal purposes.

We invite you to review more details in the document prepared by the Dispute Resolution team here.