PANAMA Law and Practice Contributed by: Kharla Aizpurúa Olmos, Mónica Moreno and Eduardo Oteiza, Morgan & Morgan
The Civil Code and the Commercial Code regulate the way notifications or consents necessary for the per- fection of such assignments agreed between assignor and assignee must be made or obtained, and which rights are assignable, and how to perfect the assign- ment, depending on the right being assigned. As mentioned above, usually, the assignment agree- ments that are part of the collateral documents of a financing arrangement contemplate (i) an uncondition- al assignment of economic flows; and (ii) a conditional assignment of certain material contracts, which would be effective upon the occurrence of a default under the financing documents. To perfect the assignment of rights and/or contracts, there are certain formalities: • Unconditional Assignment of Rights (Cash Flows): For these assignments to be effective against the assignor’s counterparty (ie, the payor of the account payable being assigned) so that the assignee (trustee) can directly collect them from said third party, the assignor must either notify the third party or obtain its consent, depending on the underlying contractual obligations with such third party. Notifications must comply with Article 789 of the Commercial Code, which states that the notification must be made “in the presence of two witnesses, or in another authentic form.” The payor who refuses to recognise the assignee as credi- tor and wants to oppose the assignment, must object within twenty-four hours of being notified, after such time the assignment will be considered accepted for all legal purposes. • Conditional Assignment of Material Contracts: In order for the assignment of the material contracts to be perfected, the fulfilment of certain conditions is required, which are agreed upon as of the date of signing the respective assignment contract. The conditions of a conditional assignment may vary according to what the parties stipulate in the assignment agreement, but typically include: (i) notification of default under the financing docu- ments; (ii) prior consent or notification from the respective counterparty; and (iii) designation of the assignee or indication of the capacity of the assignee to designate a new entity in favour of
which the contract will be assigned in case of default. The purpose of the conditional assignment is to ensure, prior to a default, that the counter- parties of the material contracts are aware of the financing documents and accept that, in the event of a default, they must proceed according to the instructions of the assignee and whoever they designate. The assignment agreement is subject to stamp tax at a rate of USD0.10 for each USD100 of the value of the document. Real Estate Mortgage Real estate properties include all existing and future assets of the debtor that constitute real estate in accordance with Article 325 of the Panamanian Civil Code, and all improvements and fixtures thereof. The mortgage and antichresis over real estate is regulated by the Civil Code, and its execution is only possible before the courts. Real estate mortgages must be signed in a public deed before a public notary and registered in the Public Registry of Panama. Real estate mortgages pay a registration fee equal to USD10.00 per property, plus USD3.00 for each USD1,000.00 of the secured amount of the mortgage, plus a stamp tax of USD8.00 per page. Chattel Mortgage The purpose of this guarantee is to cover movable goods that would not be covered by other guaran- tees established under the respective financing docu- ments; for example, solar panels in the case of a solar energy project, intellectual property, cars, amongst others. Article 326 of the Civil Code states that “movable goods are those that can be appropriated and are not included in the previous chapter, and in general all those that can be transported without damage to the immovable property to which they were attached.” Law 129 of 2013, which regulates chattel mortgages or mortgages over movable goods (“Law 129”), estab- lishes that such mortgage with a lien amount equal to or greater than USD20,000 must be granted in a pub- lic deed. In those cases where the value is less than
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