Our office advises and assists clients with debt recovery, which governs bills of exchange, promissory notes and cheques, securities and documents incorporating a credit right.
Collecting payment of bills of exchange, cheques, and promissory notes
These debts are recovered using a special procedure for the payment of claims documented in exchange securities, which are the bill of exchange, the cheque, and the promissory note. These claims are resolved using a priority, expedited procedural channel, meaning that credits enshrined in these instruments can be enforced more quickly and effectively by the creditor or the bearer.
Only bills of exchange, cheques and promissory notes that meet the requirements of the Exchange Act and the Exchange and Cheque Act may use the procedure. Therefore, the first condition for this procedure is the presentation of a formally correct bill of exchange, i.e. that fulfil the formal requirements of the Exchange and Cheque Act for each type of bill of exchange. If these securities do not meet the mandatory standard conditions, the security shall not be considered a bill of exchange, cheque, or promissory note and, consequently, shall not serve to initiate the exchange rate. However, it does provide the possibility for a blank bill of exchange, which is incomplete at the time of issue in terms of its essential elements. It can subsequently be completed as agreed by the parties before presentation for payment. The same applies to cheques and promissory notes.
Claims involving cheques and bills of exchange:
The Exchange and Cheque Law establishes the types of claims that can be brought, distinguishing between (i) the direct action, which can be brought against the party that accepted the bill of exchange and his guarantors, or against the signatory of the promissory note and his guarantors; and (ii) the return action, against any other party required to pay. In addition, the holder of the bill of exchange may also bring “extra-exchange” actions, which are (i) the underlying action, based on the underlying legal transaction that has given rise to the issue of the bill of exchange; and (ii) Cause of action for unjust enrichment, when the holder has lost the underlying action and cannot bring an underlying action, he may claim against the issuer, acceptor or the endorsers, to the extent that any of them have been unjustly enriched as a consequence of the extinction of the obligation to pay.
Once the claim is filed, the court analyses whether the security meets the formal, legal requirements to ascertain whether the circumstances for the enforcement of the direct action are fulfilled. If the security fulfils the legal requirements, the judge will issue an order for two measures: (i) the requirement for the debtor to pay within ten days; and (ii) the immediate seizure of the debtor’s assets for the amount shown in the security, plus another amount for default interest, expenses, and costs if the debtor does not pay as ordered and in time.
In contrast, if the order denies the request for payment and immediate seizure, it will be directly appealed. However, the plaintiff may also file a motion for reconsideration of an interlocutory order. On the other hand, there is no appeal against the order granting the measures because the debtor has the possibility of challenging it using the corresponding application for opposition within ten days of the payment order.
The seizure specified in the order initiating the exchange proceedings is a special preventive seizure, which does not require the general conditions for precautionary measures because the regulation of the preventive seizure in these proceedings is a special law and does not require this. It is, moreover, an immediate seizure ordered by initiating the corresponding proceedings and takes place immediately, unless the debtor pays at the same time as the demand is made, without waiting for the ten days allowed to make the payment to elapse.
The debtor may file an opposition claim within ten days of the payment request. He may allege the defences and grounds provided for in the Exchange and Cheque Law. Moreover, according to this legal text, only the defences set out therein are admissible against the enforcement of the claim, which includes: (i) defences and grounds relating to the non-existence or non-enforceability of the obligation; and (ii) extra-exchange defences, which refer to the causal or underlying legal relationship. Concerning exchange-rate defences and grounds, the debtor may object to the non-existence or non-validity of the declaration, including the validity of the signature; the lack of legitimacy of the holder or the necessary formalities of the bill of exchange, cheque, or promissory note; and the cancellation of the credit with which the defendant is required to comply. Concerning the extra-exchange defences, the debtor may raise of exchange the defences based on the parties’ personal relations against the holder of the bill; and also personal defences that he has against previous holders if, when acquiring the bill of exchange, the holder went ahead despite knowing that it prejudiced the debtor. That is when he became aware of the personal defences that the debtor had against the issuer or the endorser, which the holder could not oppose. On the other hand, in the application for opposition the debtor may allege any procedural defects that prevent the proceedings from being validly conducted.
Collection proceedings resolution:
If the debtor opposes the collection proceedings, counsel from the Administration of Justice shall forward the written opposition to the creditor to challenge within ten days. Then, either party may request the hearing in their respective written opposition and challenge to the opposition. However, if neither party requests it, the judge may agree to and adopt it. Otherwise, the judge will decide without further proceedings on the opposition.
A decision that rejects the opposition starts the enforcement procedure for the creditor, even if the decision is appealed, and the creditor may request provisional enforcement. On the other hand, a decision upholding the opposition will result in the release of the seizure against the debtor unless the decision is appealed and the creditor appeals against the judgement and requests that the seizure be maintained.
The experts in our commercial department advise and defend the interests of our clients in collection proceedings, claiming amounts due and documented in these types of securities.