DOMINICAN REPUBLIC Law and Practice Contributed by: Alfredo Guzmán Saladín, Fabio Guzmán Ariza and Julio Brea Guzmán, Guzmán Ariza
procedure, now available to all types of creditors after a 2017 court ruling. Aside from the judicial foreclosure process men - tioned, there are no other legal avenues available to enforce a loan against a defaulting debtor. 3.7 Subordinating Existing Debt to Newly Created Debt Banks usually require a first-rank mortgage and will not accept subordination to an existing col - lateralised debt. Most credit agreements forbid the debtor from entering into additional agree - ments without express authorisation from the lender; if they do, the new debt will be registered as a second-rank mortgage with second priority There is no lender’s liability in the Dominican Republic with respect to environmental laws. 3.9 Effects of a Borrower Becoming Insolvent Under Law 141-15, foreclosure or sequestra - tion processes pursued by creditors affecting more than 50% of a commercial debtor’s assets, among other conditions, can trigger a bankrupt - cy and restructuring process. Aside from exceptions for certain regulated industries, such as banks and stock exchange- related entities, as well as government-owned entities, the law is applicable to any Dominican or foreign entity or commercial individual person with a permanent establishment in the country. All of the following processes against the debtor will be deemed as automatically stayed or pro - hibited once the court approves the bankruptcy petition: after the initial registered lender. 3.8 Lenders’ Liability Under Environmental Laws
• all legal, administrative, tax or arbitration claims or lawsuits, including foreclosure and sequestration processes; • computation of liquidated damages clauses and contractual or judicial penalties; • disposition of a debtor’s assets, including the filing of a non-registered deed of sale, unless otherwise authorised by the law; and • payment against debts originated prior to the restructuring request. These processes will remain stayed during the restructuring plan’s execution, thereby prohibit - ing any asset seizure actions by the creditors. The stay will be lifted if the restructuring plan fails and the court authorises the debtor’s asset liquidation. During the restructuring’s conciliation and nego - tiation stage, all creditors, including secured ones (registered securities, mortgages and pledges, etc), that wish to have voting rights assigned to them for the execution of the restructuring plan must formally register their credits before the Bankruptcy Court, prior to the court-appointed mediator’s submission of the final report to the court. 3.10 Taxes on Loans When obtaining a mortgage, it is essential to consider the purchase loan government taxes, which are typically charged by legal advisors. These fees amount to 1% of the value of the contract. Additionally, some lenders may impose other fees or charges related to mortgage process - ing, and these may vary by institution.
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