DOMINICAN REPUBLIC Law and Practice Contributed by: Marielle Garrigó, Urania Paulino, Eduardo Pellerano and Ricardo Pellerano Nadal, Pellerano Nadal Law & Consulting
6.2 Restrictions See 5.4 Restrictions on Upstream Security , which also applies to this section. 6.3 Requirement for Guarantee Fees Dominican law does not stipulate any fees for guarantees. 7. Lender Liability 7.1 Equitable Subordination Rules Law No 141–15 on Restructuring and Insolvency of Companies and Business Persons contains rules on reorganisation and liquidation pro- ceedings. However, although this Law applies to national or foreign companies and business persons with domicile or continuous presence in the Dominican Republic, the Law excludes commercial entities controlled by the state, financial intermediation entities regulated by the Monetary and Financial Law No 183–2, secu- rities intermediaries, investment fund manage- ment companies, centralised security depos- its, investment fund management companies, centralised security deposits, stock exchanges, securitisation companies and any other entity considered to be a stock market participant, with the exception of publicly traded companies and companies governed by Law No 19–00 on the Securities Market dated May 2000. Special rules apply to companies participating in the electric sector are also excluded. Some assets are also excluded from the bankruptcy proceedings. According to Law No 141–15, debt payments must be carried out in the following order: • labour liabilities, arising from the Labour Code or social security regulations;
• costs of the restructuring process, including fees of officials and auxiliaries involved in the process; • loans agreed to by financial entities or third parties that will contribute to the financing of debts owed to essential and public service providers or suppliers, duly authorised by the court; • debts that result from the execution of agree- ments that remain in force after the beginning of the restructuring process, with respect to which the creditor in question agrees to receive deferred payment; and • other liabilities according to their rank under law. Additionally, penalties for anticipated termina- tion of lease agreements and overdue rents corresponding to the last 12 months also have higher priority in relation to other claims. 7.2 Claw-Back Risk Article 98 of Law No 141–15 established the possibility of requesting annulment of transac- tions made within a period of two years prior to the filing date of the reorganisation request, provided that the court deems they constitute an unjustified diversion of assets or are detrimental to creditors. In addition, Law No 141–15 has a list of trans- actions that can be declared as null and void, among which are: • transfers of assets free of charge or at a price below market value when the tended con- sideration is worth less than the obligation performed, or vice versa; • the cancellation or partial or total relief of the debt by the debtor; • transactions with related entities where the debtor or any of the creditors serve as an
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