Retention of title, ownership by way of security and discharge in insolvency

Abstract

The leading case law by the Mercantile Courts considers that claims secured with retention of title can be discharged in insolvencies without sufficient assets, without applying article 489.1. 8.º of the Consolidated Text of the Insolvency Act, which carves out from discharge any debts with an in rem security.

However, in the last months, two rulings by the Provincial Courts of Alicante and Pontevedra have rejected discharging these liabilities, due to the procedural difficulties that it would entail for secured creditors. This is in addition to previous decisions by the Provincial Courts of Madrid and the Balearic Islands, which came to the same conclusion on different grounds.

Based on these decisions, we will carry out an analysis of this institution, which has elicited very much controversy in our legal system over decades.