Pre-emptive recording of insolvency proceedings

Abstract

In this article, the author examines the effectiveness of the preemptive recording of insolvency proceedings in the registry entries for properties belonging to the insolvent party. The said pre-emptive recording, which is a provisional entry, makes the fact of said insolvency proceedings enforceable against third parties, and constitutes statutory notice of the insolvency situation and of its effects on the debtor's assets. The author indicates that the purpose of pre-emptive recording of insolvency proceedings is to block the creation of new third-party mortgagees during the period before the insolvency proceedings is (definitively) recorded at the Registry. However, indicating this purpose is not sufficient to determine the nature of the pre-emptive recording or the registry-related effects that it has in relation to actions deriving from the insolvency proceedings, or in relation to actions unrelated to the insolvency proceedings but relating to the property against which the pre-emptive recording is made. The legal nature of pre-emptive recording of insolvency proceedings would be related to the legal nature of the restrictions placed on what the insolvent party can do with its assets set forth in the court order instigating the insolvency proceedings and which are published by way of the pre-emptive recording. In this regard, the option chosen is to regard such pre-emptive recordings as a judicial ban on disposing of or administering assets. Having established their nature, the author then examines the effects of the pre-emptive recording of insolvency proceedings (during the common stage of the insolvency proceedings) on any legal transactions performed and any distraints imposed prior to the commencement of the insolvency proceedings; acts of disposal performed during the common stage of the insolvency proceedings; the recording of claims deriving from proceedings separate from the insolvency, and enforcement proceedings deriving from distraints or mortgages recorded prior to the pre-emptive recording of insolvency proceedings.