|Carlos N Lafargue|
The Spanish Act 38/2011, of October 10 2011, has amended the Spanish Insolvency Act 22/2003 introducing a new controversial sentence in article 90.1.6 stating that the "pledge securing future credits will only grant a special privilege to credits arising prior to the declaration of insolvency, as well as to credits arising after such declaration, when reinstated by virtue of article 68 or when the pledge was recorded in a public registry prior to the declaration of insolvency".
As a consequence, a key difference among creditors based on whether such credits have arisen before or after the declaration of the insolvency has been established. It is still unknown if this was the true purpose of the legislator. In relation to credits arising after the declaration of insolvency, this new differentiation leads to a scenario where only the creditors with a pledge duly registered in the relevant registries (Chattel Mortgage Registries) or with the credits reinstated pursuant to article 68 of the Spanish Insolvency Act would be considered creditors with a special privilege.
There are two main academic discussions: (i) in relation to the interpretation of the "future credits" mention since it can be understood that it refers either to the secured obligations under the pledge or to the object of the pledge itself; and (ii) depending on the interpretation of "future credits", in relation to the pledges over future credit rights which may arise from agreements executed before Act 38/2011 (financing agreements which have not been completely disbursed, for example) and an eventual retroactive application.
In the absence of a specific clarification from the legislator and with limited experience in the enforcement of the pledges over future credit rights under the 2011 Act, a conservative approach would be to carry out a literal interpretation of article 90.1.6 of the Spanish Insolvency Act. As a result, the interpretation of "future credit" would be understood as future credit rights held by the third parties against debtor and secured by the pledge.
Finally, in accordance to the above considerations, it would be advisable to review and eventually adapt the pledges executed before Act 38/2011 securing future credit rights which do not exist yet in order to file such pledges with the relevant registries and ensure their enforcement strength in a potential insolvency scenario.
Carlos N Lafargue Fernando
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