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

TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004
HONDURAS
Insolvency proceedings in Honduras include three distinct proceedings: the concurso, or
concurrencia, a consumer (or non-merchant) bankruptcy under the Civil Code; 86 quiebra, or
merchant bankruptcies under the Commercial Code; 87 and suspensión de pagos, or merchant
reorganizations under the Commercial Code. 88 As confirmed by the relatively small number of
its articles on suspensión de pagos, the Commercial Code does not contain an extensively
developed law for merchant reorganization through restructuring of debts. However, its
provisions are open and flexible enough that they would permit an active and commercially
savvy judge to oversee an effective reorganization.
Both the Honduran Civil Code and the Honduran Commercial Code treatments of insolvency
retain a vestige of classic bankruptcy law, the skeptical presumption—largely absent from
modern insolvency statutes beginning in the mid 20 th century—that the debtor who cannot pay
his or her debts is probably guilty of improper conduct. 89 The codes both provide for
proceedings to determine the debtor’s degree of responsibility for the financial failure. The
Commercial Code in particular includes rather extensive provisions for assigning blame and even
criminal penalties in cases of merchant bankruptcy and imposes an obligation on the court to
determine the degree of responsibility of those with administrative control of the debtor, ranging
from “fortuitous” bankruptcies to “culpable” bankruptcies and, at the extreme, bankruptcies in
which criminal fraud is present. 90
1. Code of Procedures
Promulgated in 1906, the Code of Procedures includes both civil and criminal procedures. Its
civil section includes careful provisions for both consumer and commercial bankruptcies before
the trial courts of general jurisdiction. 91 Specifically it provides for a debtor to turn over nonexempt
assets to the estate administered by the court. 92 The court then gives notice and holds a
meeting of all creditors to sort out claims against the debtor and to permit the debtor to propose
to the creditors a plan for restructuring his or her debts, if he or she wishes to do so. 93 The court
also supervises the appointment of a trustee in bankruptcy (síndico) to liquidate the debtor’s
assets in favor of creditors’ proven claims 94 and presides over the determination of whether the
86
CC [Civil Code], Libro IV (De las Obligaciones y Contratos), Título XV (De la Concurrencia y Prelación de
Créditos), Arts. 2244-2262.
87
CdCom [Commercial Code], Libro V (Quiebra y Suspensión de Pagos), Títulos I-V, Arts. 1318-1640.
Nonetheless, the síndico, or bankruptcy trustee, may propose the continuation of the business instead of its
liquidation, a form of reorganization under bankruptcy proper. CdCom, Art. 1357(III).
88
CdCom, Libro V (Quiebra y Suspensión de Pagos), Título VI, Arts. 1641-1674.
89
The term “bankruptcy,” derived from the Latin for “broken bench,” came from the medieval practice of
breaking the insolvent merchant’s bench so that he could no longer carry on commerce in the marketplace.
The same presumptive anathema attaches to the consumer who cannot pay his or her debts, although perhaps
not to the same level. See CC, Art. 1442.
90
See CdCom, Arts. 1392, 1398-1421, 1628-1640 (stripping bankrupt merchants of their civil rights and
prohibiting them from engaging in commercial acts until and unless they are “rehabilitated,” either by a finding
that the bankruptcy was “fortuitous” or by repayment of all debts in the case of “culpable” or “fraudulent”
bankruptcies).
91
Código de Procedimientos (CdProc), Libro III (De los Juicios Especiales), Título II (Del Concurso de
Acreedores), Arts. 524-644, and Título III (De los Procedimientos de la Quiebra), Arts. 645-654.
92
CdProc, Arts. 536-537, 588-592.
93
CdProc, Arts. 538(2), 543-556, 567.
94
CdProc, Art. 569.
VIII-8