PANAMA Law and Practice Contributed by: María de Lourdes Marengo and Joaquín De Obarrio, Patton Moreno & Asvat
2.10 Cape Town Convention and Others 2.10.1 Conventions in Force The Convention on International Interest in Mobile Equipment (the “Convention”) and the related Pro - tocol on Matters Specific to Aircraft Equipment (the ”Protocol”) have been adopted and are in force in the Republic of Panama. Panamanian law does not require local entities to apply authorised entry point codes in Panama. 2.10.2 Declarations Made Concerning Conventions The Convention In respect of Article 13 (1)(a), (b) and (c) of the Con - vention, the words “speedy relief” shall be taken to mean seven working days and, in respect of Article 13 (1)(d), the same words shall be taken to mean 20 working days. In respect of Article 39 of the Convention, the follow - ing non-consensual rights and interests shall prevail over an international interest registered in accordance with the Convention: • any sums due from or capable of being demanded from the debtor by way of salaries, pensions and other social security benefits and employment allowances owed in respect of employees of that debtor; • any sums due from or capable of being levied from the debtor by way of fiscal and parafiscal contribu - tions owed in respect of employees of that debtor; • any sums due from or capable of being levied from the debtor, by way of taxes, duties or contribu - tions payable to the Panamanian State or to the decentralised bodies that collect such revenue, in accordance with Panama’s internal laws; and • the right of the Republic of Panama to arrest, attach or confiscate mobile equipment and aircraft equipment in the event of breach of the customs or criminal laws of the Republic of Panama. The Republic of Panama declares that the rights or interests covered by this declaration shall prevail over an international interest registered before the date of the deposit of its instrument of ratification in respect of the Convention and the Protocol.
The liquidator/administrator may review and establish the priority of creditors during the process. 2.9.6 Risks for a Lender if a Borrower, Guarantor or Security Provider Becomes Insolvent The main risk would be, firstly, that the assets are not sufficient to cover the repayment of the credit, making it impossible to recover, and, secondly, that the credit, once subjected to the insolvency process, is not rec - ognised or is rated at a level of priority that makes it impossible to recover. 2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings The Insolvency Law establishes a financial protec - tion period granted to the debtor who submits to the process, during which time its liquidation may not be requested or declared, nor may executive proceed - ings, executions of any kind, restitution of assets or foreclosures be initiated against it. This period starts from the date of the order decree - ing the opening of the reorganisation process until the confirmation of the reorganisation agreement. 2.9.8 Liquidation of Domestic Lessees Panama’s Insolvency Law establishes that a domestic lessee may undergo a reorganisation proceeding or a court-ordered liquidation. This liquidation is the pro - cess by which the sale or realisation of the debtor’s assets is carried out, with a view to the distribution of the proceeds among the debtor’s creditors. 2.9.9 Ipso Facto Defaults The Insolvency Law contains provisions allowing the unilateral termination due to ipso facto defaults. An ipso facto default clause agreed by the parties in a lease agreement would be recognised and enforce - able in Panama. 2.9.10 Impact of Domestic Lessees’ Winding-Up Upon the judicial winding up or liquidation of the domestic lessee, the court would order the return of the aircraft to its registered owner, while the amounts due as lease would become part of the assets of the insolvency proceedings. The provisions set forth in the lease agreement would regulate the handling of the security deposit and any maintenance reserves.
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