SUPREME COURT RULING OF APRIL 9, 2014, NO. 175/2014: IN THE RESCISSION OF THE  ASSIGNMENT IN PAYMENT AGREEMENT (DACIÓN EN PAGO), THE CREDIT OF THE NONDEFAULTING PARTY  IS AN  INSOLVENCY CLAIM AND NOT AGAINST THE INSOLVENCY ESTATE

The assignment in payment (dación en pago) of debt is an act extinguishing obligations and not a bilateral agreement. Therefore, its rescission leads to an insolvency claim for  the non-defaulting party.

This judgment discussed the classification in insolvency of the non-defaulting party of an  assignment in payment agreement (dación en pago) should the transaction be rescinded. The insolvency administration requested the rescission of  an  agreement  the insolvent  company had with one of its creditors, under which it delivered one of its assets to the  creditor in payment of its debt. The first instance judgment declared the rescission of the  transaction and, based on a “coherent and logical interpretation of the system,” classified  the credit as ordinary,  whereas the provincial court of  appeal,  literally applying article 73.3 of the Insolvency Act, considered it was a claim against the insolvency estate. The Supreme Court quashed and cancelled this latter decision.

As a starting point, the Supreme Court compared this case to one of unilateral payment  by a debtor before insolvency, stating that the rescission of a unilateral act of disposal,  such as payment, does not imply the inefficacy of a transaction generating the payment obligation intended to be satisfied with the challenged act. The  rescission would only  affect the payment, with the obligation to restore it arising for the recipient and without  it losing its credit right which, because it existed before the declaration of the insolvency,  is considered to be an insolvency claim.

The judgment contemplates the assignment in payment (dación en pago) as an  agreement of intentions under which the creditor agrees to  receive from the debtor one  thing for another with the effect of extinguishing the original  obligation (a means of settling). Its  rescission  would render this settling  effect of the pre-existing obligation ineffective and, as a result, the creditor would again become the holder of the credit for  the amount it had before the dación en pago as an insolvency claim.