Question for Maria re " credit contra de la masa "

Hi Maria Hope you are well .  I have  a rather complicated question I would like to know your opinion on ,

When a building company is in concurso/administration and the judge is deciding on which level of credit (without a hearing ,as in this case the judge has said no hearing ,the judge will decide ) what are the chances of him deciding that purchasers of off plan property will be credit against the mass . first line creditors ? is it unheard of ? has it ever happened before ? 

Will the judge  take any laws or circumstances into account when making this decision ? for instance consumer law  ( if the property was being purchased by an individual as a holiday or permanent  home ? ie consumer law )

Would it make a difference if the property was being purchased by a company or business  or if many properties were being bought as a business venture to sell on at a profit ?

In short what will the judge base his judgement on ? perhaps it is like the UK where only government get this classification ie Tax ,vat , banks etc .

Thank you Maria as always your opinion is very valued and much appreciated      MM

PS in the case of a few builders in administration we will know the answer to this soon ,I just wondered what your thoughts are Thank you

 Dear Magicmeg:

There is a phase of the Creditor´s meeting procedure where a " convenio" ( agreemena) is presented to creditors. That is the moment to chellenge if you consider your credit has not been duly recognised or classified.

Decission of the judge is based on the Creditor´s meeting Act itself where there are criteria provisions for the clasification of credits. Correspondent challenges by creditors need to be based on same Law, alleguing an incorrect classification/ quantification of credits.

Accordong to the Creditor´s meeting Act, regular credits ( not under the special rules of the creditor´s meeting) are, among other ones,  those credits  which derive from pending contracts or from restitution/compensation obligations out of  voluntary or obligatory ( by breach) cancellation.

Consumers Law and the fact of the creditor being an individual or a company does not have an impact here. 

Hope this clarifies your doubts.

Maria

Hi Maria,

Have you heard of, or had any legal success, with purchasers who fall into the category, where for example thay have won the first instance decision for breach of contract and are awaiting either a provisional enforcement order or developer's appeal when the developer goes into administration, being successful in their credit being classified as priviledged by the judge?

According to the provision mentioned below:

" those credits  which derive from pending contracts or from restitution/compensation obligations out of  voluntary or obligatory ( by breach) cancellation"

it should be classified as a commun/regular ( out of creditor´s meeting rules) credit.

Have no experience of knowledge of that situation being passed and decided by a Judge so far. These situations ( off plan purchases- creditor´s meeting- new Bankruptcy Act) are very new and it might be that there si still no particular decission in place. I will ask the litigation department on this though.

Best,

Maria

Many thanks for the clarification on that Maria. We'll look forward to your findings once you have spoken to the litigation dept.

Bottom line however...... does a common/regular credit (as opposed to a priviledged credit) make it highly unlikely that the succesful first instance decision judgement  against the developer (for breach of contract) would be honoured in terms of return of monies from the developer's estate, as per the judgement, once the developer has gone into administration  (i.e.whilst the purchaser was awaiting an enforcement order/developer's appeal)?

 Credits against the goods of the company are first to be paid, even before the privileged credits.

Thanks again Maria. Would the provisional enforcement order and developer's appeal, already in the legal system (i.e. awaiting a court hearing/judgement), still proceed in these circumstances where the developer has gone into administration?

 Yes, they still proceed if action in first instance level was started before the company was approved for Creditor´s Meeting.