A “Bill of Law on Movable Guarantees” was recently filed before the Congress for consideration, based on the Model Law on Secured Transactions of the United Nations Commission on International Trade Law. The purpose of this Bill is to incorporate into national legislation the possibility of establishing pledges on movable assets to secure the obligations to be entered.
The purpose of the mentioned Bill is the possibility that movable assets can be used as a guarantee on contractual obligations, following in a certain way the real property rights model, regulated and provided under our current laws. If the Bill is approved, movable assets may be given as a guarantee of compliance with any obligation, own or belonging to others, regardless of the form of legal figure used, and would comprise, by way of example, conventional pledges, registered pledges, operations with warrants, sales with retention of title, trust in guarantee on movable assets, financial or commercial leasing, factoring operations and other similar operations.
Regarding the constitution of guarantees on movable assets, they would be implemented through a written guarantee agreement, provided that the secured debtor has rights over the asset to be encumbered or powers to encumber it, and must indicate (a) secured creditor and secured debtor; (b) the guaranteed obligation; (c) the encumbered asset and (d) the maximum amount for which the guarantee on a movable assets could be executed. Likewise, also the constitution of guarantees on future movable assets, which will be conditioned on the fact that the secured debtor actually acquires rights over such asset or is empowered to encumber it. It is an extensive Bill, it provides detailed information on the obligations to be guaranteed, movable assets subject to guarantee, amount of guaranteed obligation, enforceability against third-parties, among others.
The virtue of the Bill lays on the fact that, if approved, it would expand the range of available alternatives for assets that could be used to guarantee obligations. Several economic sectors will benefit from the possibility of using movable assets as a credit guarantee, for instance, to generate new capital, thus increasing their productivity, competitiveness and growth. We see that this bill, if passed and enacted, will specially contribute with MIPYMES, which usually do not have real estate assets to guarantee their obligations, therefore they would be able to offer movable assets that make up their capital as guarantee, namely machinery, vehicles, receivables, among others. Considering the benefits that would be brought into the legal system of guarantees in Paraguay if aforementioned Bill is approved, we can assure that its economic impact will be beneficial not only for MIPYMES, in all economic sectors, but for the population in general.
