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Security Over Assets in the Dominican Republic

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Pledges and Collateralization

In the Dominican Republic, securing assets through pledges is a common practice. Here are the key points to consider:

  • Pledge Agreement: A pledge agreement must be signed between the parties and duly notified to the financial entity where the instrument is held.
  • Financial Instruments: Pledges over financial instruments, certificates of deposit, and insurance policies require a notarised agreement and notification to the issuing institution for final approval (if necessary) and formal registration.
  • Cash Deposits: A separate security/pledge agreement must be signed between the parties, which is usually referred to as a ‘fiduciary cession.’ This agreement must be notified to the financial institution where the deposits are held and registered by the lender.
  • Intellectual Property: IP rights are collateralised through the execution of a pledge agreement and its registration with the National Office of Intellectual Property.

Enforcement

When it comes to enforcing security over assets, lenders and borrowers must negotiate the events of default that will trigger enforcement. Here’s an overview of the process:

  • Criteria for Enforcement: The lender and borrower negotiate the events of default that will trigger enforcement of the collateral, which can include failure to make timely payments, breach of contract, and so on.
  • Process for Enforcement: Where foreclosure is the appropriate course of action, the steps involve notice to the debtor through a bailiff’s act, a request for foreclosure of the assets granted as security, and the sale of the assets at a public auction.

Insolvency

In cases of insolvency, the ranking of credits in relation to secured and unsecured claims is crucial. Here are some key points to consider:

  • Ranking in Insolvency: Credits originated after the commencement of the insolvency proceedings have a higher priority in relation to all other secured and unsecured claims other than those owed to the tax authorities, employees, or originated by the insolvency proceedings.

Note: This is a general overview of security over assets in the Dominican Republic. It’s essential to consult with a qualified attorney or financial advisor for specific guidance on your situation.