Trade and Commercial Law Assessment - Honduras - Economic ...

TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004
HONDURAS
known as a prenda sin desplazamiento. 54 The Honduran Commercial Code also provides that a
pledge may take the form of a floating lien against a rotating stock of fungible goods, such as an
inventory, 55 and may guaranty conditional or future obligations; 56 and that a prenda may affect
any kind of goods “tangible or intangible,” 57 all striking provisions for their time and consistent
with modern practice today. 58 The Commercial Code creates a broader form of the pledge in the
mortgage against a commercial establishment, a floating lien which “shall comprehend all the
elements of the [enterprise], 59 without necessity of nominal description.” 60
Despite these forward-looking provisions, the Honduran Commercial Code could not foresee
many standard contemporary provisions. Specifically, it conceives each pledge-secured
transaction as a standalone deal, with a new priority each time the new prenda is registered.
Modern laws accommodate secured transactions that consist of a series of deals—such as a line
of credit, which may go on for years—between creditor and debtor, all in contemplation of an
established priority against third parties dating from the time of the initial loan and valid for all
guaranties securing subsequent loans.
Again advanced for its time, the Commercial Code provides for relatively expeditious
foreclosure when a debtor defaults on payment. Although it does require a judicial order, 61
execution against the pledged item may take place by public sale, with notice to the debtor,
carried out by notary, certified broker or even “two merchants established in the market, at the
price set by an exchange or at market price.” 62 Honduran legal practitioners and bankers
indicated that under this procedure they could execute on a commercial pledge within 30-45
days. Although the Honduran law on execution against collateral compares quite favorably to
that of other Central American countries, it still lags behind contemporary practice that would
utilize procedures even more liberal than those enabled by Honduran CC article 2087—
specifically by permitting the creditor to possess the collateral and liquidate it without
participation of a third party.
The Código de Comercio recognizes another kind of floating lien used extensively in Honduras’s
important agricultural sector, to guaranty credits that enable the debtor to produce crops or
livestock or manufacture industrial products by purchasing the necessary inputs, machinery and
installations (in general, créditos a la producción, 63 often referred to by more specialized
categories as créditos de habilitación o avío, 64 which refer to annual or periodic loans for crop,
54
CdCom, Art. 1297.
55
CdCom, Art. 1294.
56
CdCom, Arts. 887, 1291.
57
CdCom, Art. 1292 (corporales o incorporales).
58
On the other hand, the CdCom also provides that transfer of a key to the facility in which the pledged goods are
kept is the equivalent of transferring the goods themselves, a vestige of bygone times. CdCom, Art. 1299.
59
CdCom, Art. 648 lists the “elements” that make up a commercial enterprise: essentially everything of economic
value pertaining to the business.
60
CdCom, Art. 1315.
61
The CdCom nullifies any contractual clause that would permit the creditor to take possession of the pledged assets
or dispose of them by any method not involving a judicial order. CdCom, Art. 1305.
62
CdCom, Art. 1303.
63
CdCom, Arts. 916-928.
64
CdCom, Arts. 916-917.
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