Argentina: Security Interests In Argentina And Other Legal Tools To Enforce Collection Of Debts. A Brief For Foreign Lenders

Last Updated: 10 April 2017
Article by Mario Eduardo Castro Sammartino
Most Read Contributor in Argentina, November 2017

1. Security interests

Security interests in Argentina may be structured through different agreements according to the nature of the assets included as collaterals.

The Civil and Commercial Code of the Nation (Código Civil y Comercial de la Nación or CCCN) makes a distinction between personal or movable property and real property or real estate (Articles Number 225 and following).

Real property1 includes the real estate by its nature (the soil itself, its organically embedded things and those located without human intervention. CCCN, Article Number 225) and the real estate by accession (personal property immobilized by being physically attached to the soil with a lasting nature, with the exception of things inherent to the real estate´s operation or to the owner´s activity. CCCN, Article 226). Movable property includes those things that may move by themselves or by an external force (CCCN, Article Number 227).

Security interests grant the secured creditor a privilege or priority interest to collect the debt over the proceeds of the collateral above the claims of other creditors.

a. Security interests in real estate

Mortgages and antichresis may be used to create a security interest in real estate.

Mortgages may be created over a specific real estate, ship or aircraft. Mortgages over real estate are governed by Articles Number 2,205 through 2,211 of the CCCN. Mortgages over ships and aircraft are regulated by special legislation (the Shipping Law Number 20,094, Article Number 499 and followings, and the Aeronautical Code, Article Number 52 and followings).

Antichresis lies on real estate and registered personal property, whose possession is delivered to the creditor or an appointed third party, and allows the collection of the proceeds to pay out a debt (CCCN, article 2,212).

b. Security interests over movable property

Secured credits over movable property may be created through pledges or chattel mortgages. 

Pledges involve the delivery of a certain debtor´s asset to the creditor or a designated third party (CCCN, Article Number 2,219). Movable property, credits (CCCN, Articles 2,232 through 2,237), cash, and shares (General Companies Law Number 19,550, as amended, Article Number 219) may be pledged.

Chattel mortgages allow the debtor to keep possession over the movable property and may be created by an Agrarian pledge or a registered pledge. Agrarian pledges are regulated by Law Number 9,644 and may be created on agricultural machinery, implements, and tools; animals, their products, and personal property devoted to rural operations; fruits and crops corresponding to the year in which the pledge is made and timber, mining products; and products of national industries (Article Number 2). Registered pledges are governed by Law Number 12,962 (Ley de Prenda), may fall on all kinds of movable assets and be fixed or floating over an inventory of goods.

2. Guaranties

Guaranties, bonds or performance bonds are governed by Articles Number through 1,574 through 1,598 of the CCCN and are also common in financial transactions. A guaranty gives the creditor and additional person to pursue collection if the principal debtor defaults on payment. Unlike security interests, guaranties do not create a lien over any collateral in favor of the creditor.

3. Governing law and jurisdiction

Parties to a loan agreement may choose the laws that will govern the contract with reference to their intrinsic validity, nature, effects, rights and obligations, either to regulate all of the agreement or only a part of it (CCCN, Article 2,651). They may also choose the forum to solve their disputes. 

However, all issues related to real estate located in Argentina, including security interests, are governed exclusively by local laws (CCCN, Article Number 2,667); further, Argentine judges have exclusive jurisdiction to rule on disputes arising out of real estate located in the Country  (CCCN, Articles Number 2,664 and 2,609, sub-article a)).

As far as movable property registered in Argentina is concerned, it is also governed by Argentine law (CCCN, Article 2,668) and is subject to the exclusive jurisdiction of Argentine courts (CCCN, Article Number 2,665). Unregistered movable property, which is permanently situated in a place and is not intended to be moved to a different jurisdiction is governed by the laws of the place where it is located (CCCN, Article Number 2,669) and there exists a concurrent jurisdiction between the judges of the defendant´s domicile and those of the place where the unregistered movable property is located.

Foreign judgments and arbitral awards may be enforced in Argentina following certain recognition conditions.

4. Other legal tools to enforce performance

Further to security interests and guaranties, there are other legal tools the parties may choose to enforce performance of a loan agreement.

a) Trusts

Trusts are governed by Articles 1,666 through 1,700 of the CCCN) and may be used to secure debts, assigning certain assets to a trustee (e.g. real estate, movable property, receivables, etc.) as collaterals. Upon default, the trustee may sell the assets following the agreement´s provisions and, in the absence of stipulation, dispose of them either out of court or by judicial foreclosure (CCCN, Article 1,680). The assignment of the assets to the trustee creates a separate estate, immune to bankruptcy proceedings affecting the settlor, the trustee, or the beneficiaries.

b) Assignment of credits

Assignment of credits, including receivables, may also be executed to enforce payment of loan agreements (CCCN, Article Number 1,614 and following). Creditors may request payment to either the assignor or the debtor of the assigned credit.

5. Reorganization and Bankruptcy procedures

Reorganization and Bankruptcy procedures in Argentina are governed by Law Number 24,522, as amended. Both procedures to deal with insolvency temporarily stays the enforcement of the loan agreement and impose certain procedural burdens upon the creditor. Furthermore, security interests and guaranties may be unenforceable when the debtor is adjudicated bankruptcy and the security interest or guaranty has been created within a certain "suspicion period" (período de sospecha) before the date of insolvency or bankruptcy.

6. Some cross-border considerations on loans

There are no restrictions on foreign lenders to entering into loan agreements with local borrowers or getting securities or guaranties. No exchange control applies. Only must foreign indebtedness be registered with the Central Bank of the Argentine Republic for a debtor to make payment of principal and interest abroad (Communication "A" 3602).

Foreign lenders will be taxed by income tax on the loan´s interests. The general tax rate is 35%, although significant lower rates may apply in certain cases of international financing (Income Tax Law Number 20,628, Article Number 93, sub-article c). The local debtor is liable for withholding and payment of the tax.

Valued Added Tax is levied on the loan´s interests at a general rate of 21%; however, a 10,5% rate may apply in specific loan agreements (Valued Added Tax Law Number 20,631, Article Number 28, sub-article d).

Stamp tax applies to the granting of a loan, security interest or guaranty unless executed under an offer letter – acceptance scheme. This tax varies according to the provincial jurisdiction involved, its rate being commonly around 1%.

Creation of security interests may also involve registration charges and notary fees.

Footnote

To learn on how to acquire title to or lease real estate to do business in Argentina, please, read our article on our Legal Blog.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Mario Eduardo Castro Sammartino
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions