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Secured Transactions in Macau: Enforcement and Priority of Security Interests

Privileged Credits

In Macau, certain credits have priority over others in the event of liquidation or insolvency. These privileged credits include:

  • Credit related to court fees
  • Credit of the Macau SAR for taxes
  • Credit of a victim that implies civil liability
  • Credit for intellectual property
  • Credit of the debtor related to medical treatment or dependent persons for a period of 6 months
  • Credit for expenses absolutely necessary to the existence of the debtor or dependent persons as from the request for payment
  • Credit emerging from the labour contract or related to the termination or cessation of the labour contract in relation to a period of 6 months
  • Funeral expenses of the debtor

These privileged credits have priority over secured credits.

Priming Liens

The principle of “first in time, first in right” generally applies in Macau, with the priority of security interests determined based on the order of registration or perfection. To protect a lender’s security interest, it is advisable to register the security interest with the relevant public registry or authority.

To structure around priming liens, lenders can use the following strategies:

  • Obtaining subordination agreements
  • Taking additional collateral that is not subject to existing liens
  • Perfecting security interests promptly

Enforcement

A secured lender can enforce its collateral in accordance with the terms and conditions set out in the loan agreement.

In Macau, certain securities can be enforced judicially or out of court, without going through declarative proceedings. The courts of Macau also recognize a judgment from foreign courts through a special proceeding called “Revision and Confirmation of Foreign Judgments”, subject to certain conditions.

Conclusion

These points provide an overview of the law on secured transactions in Macau, including privileged credits, priming liens, enforcement, and recognition of foreign court judgments. It is essential for lenders and borrowers to understand these concepts to navigate the complex landscape of secured transactions in Macau.