Assignment of a credit with recourse transfers ownership of the credit to the assignee when the transfer is approved and allows the assignee to request that it is separated from the assignor’s insolvency assets.

In both rulings, the Supreme Court stated the effects of assignment of a credit with recourse on the assignor’s declaration of insolvency.

In the first case, the assigned credit arose from an agreement between a football club and an autonomous region that included covenants for advertising and sports activities in return for a fee. The credit right was assigned to guarantee a loan agreement between the football club and a bank. Before assessing the circumstances, the Supreme Court stated that this was an assignment with recourse by way of guarantee and not a pledge of credits,1 and that, for reasons of timing, the system providing for this type of assignment under Additional Provision Three of Act 1/1999 did not apply. Based on that premise,  it  referred  back  to  its  position,  defended  in  the Supreme Court ruling of February 22, 2008, that the efficiency of advance assignment of a credit requires that the defining factors of the credit must be properly determined when the credit arises, with no need for any further agreement between the parties. In contrast, the agreement or legal relationship giving rise to the credit does not need to have been concluded on the date of the assignment. Thus, the credit will arise immediately in the assignee’s head. The court found that that translational efficiency operates not only where the assignment has been made without recourse, but also where it has been made with recourse (acknowledging that it had taken the opposite position in previous rulings). It held that the fact that the credit was assigned to pay a pre-existing obligation (the debtor of the original obligation would only be released when the assignee collected the assigned credit) did not impede the full translational efficiency of the assignment of the credit. Consequently, the assignee becomes the owner of the credit when the transfer is approved, not when the credit is paid.

The ruling then establishes its interpretation of the case at issue following the essence and aim of the Insolvency Act, as stated in its Additional Provision One, to apply the right to separate under article 80 of this act. It thus asserts the assignee’s right to prevent the assigned credit from being included in the insolvency estate and, if applicable, to request its separation.

The criterion used in the first resolution settled the issue raised in the second ruling, which examined the possibility of a subcontractor taking direct action against the owner of the works, as regulated in article 1597 of the Spanish Civil Code2 in connection with a credit that had been assigned by the insolvent company before the declaration of insolvency under a factoring agreement without recourse. In this case, the court considered that the assignment in full of ownership of the credit is even clearer. Therefore, when the direct action was brought, as the contractor no longer had any claim against the owner of the works, the action had no chance of success. Additionally, case law has established that the subcontractor’s action against the owner of the works is subjugated to the insolvency assets of the contractor if the action is not brought before the declaration of insolvency, as was the case.