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Position of creditors
Forms of security
What are the main forms of security over moveable and immoveable property and how are they given legal effect?
The main forms of security over movable and immovable property and how are they given legal effect are as follows:
- mortgage over immovable property – secured creditors may bring an independent and autonomous action in order to enforce their collateral; and
- pledge over movable property – secured creditors may bring an independent and autonomous action in order to enforce their collateral.
Additionally, another form of security is to execute a guaranty trust, where the assets will be transferred to the trustee and will not be owned by the insolvent company.
Ranking of creditors
How are creditors’ claims ranked in insolvency proceedings?
Creditors’ claims in insolvency proceedings are ranked as follows:
- creditors against the estate (eg, labour claims regarding unpaid salary of the last two years);
- singularly privileged creditors (disease and burial expenses);
- secured creditors (pledged and mortgage);
- labour creditors and tax creditors;
- creditors with special privileges (right of retention);
- unsecured creditors (not subject to any guarantee or collateral security); and
- subordinated creditors.
Can this ranking be amended in any way?
No. Even if the creditors execute a private agreement recognising a different creditor ranking, the provisions of the Commercial Insolvency Law cannot be waived. These provisions are public policy, issued in the interest of society, and are therefore unwaivable. Consequently, any agreement to the contrary will be unenforceable.
What is the status of foreign creditors in filing claims?
Foreign creditors can file their claims and request the acknowledgement of their credits in three different stages:
- within 20 calendar days of the date of the last publication of the judgment where the merchant is declared bankrupt;
- within the term for filing objections to the provisional list (ie, within five calendar days of the date on which the judge makes the provisional list available to the company and creditors according to the commercial insolvency proceeding); and
- within the term for filing the appeal to the credit acknowledgement, ranking and priority of payment ruling (ie, within nine days of the date on which the ruling enters into effect).
Are any special remedies available to unsecured creditors?
The court may dictate ex officio or by petition of the creditors for numerous provisional and special remedies, including:
- prohibition against payments of obligations due before the date of admittance of the petition of commercial insolvency proceeding;
- suspension of any enforcement proceeding against the assets and rights of the company;
- prohibition against the company’s performance of sales, transfers or encumbrances of the principal assets of its enterprise;
- attachment of assets;
- appointment of a judicial administrator;
- prohibition against performance of transfers of funds or securities in favour of third parties; and
- arrest warrants in respect of the company manager for the sole purpose of not allowing the manager to leave his or her place of residence without issuing an attorney in fact with sufficient instructions and funds.
By what legal means can creditors recover unpaid debts (other than through insolvency proceedings)?
If the debtor company is under an insolvency proceeding, any other action will be ineffective for recoverningrecovering the unpaid debts, unless the creditor has collateral (mortgage or pledge) and files a lawsuit in order to sell the assets given as guarantee. Another exception is the labour creditors – workers can seize the assets of the debtor company even if it is under an insolvency proceeding.
Is trade credit insurance commonly purchased in your jurisdiction?
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