Lending to Agricultural Producers

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principe

Member
Nov 19, 2002
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When providing financing to an agricultural producer, what recourse does the lender have?

Are you "secured" under Dominican Law by assets, future export contracts, receivables? Will this security be recognized in court?

Is there precedent for this type of lending?

What type of court oversees this procedure?

Thanks in advance for any input.
 
P

principe

Member
Nov 19, 2002
531
14
18
Wow

That is crazy. I work on commodity structured trade finance deals and the flexibility in financing allows for increased capital flows into countries like brazil or colombia for example.

I guess if you draw up an agreement under NY state law with a mortgage on the land then you could circumvent the process?

Really kind of sad given all the potential the country has for agricultural products.
 
R

rescatara

New member
Apr 24, 2009
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yes its true, but you dont know the rules here. you lose.. Secure the money with the land... thats why farms lay shallow...
 
F

Fabio J. Guzman

DR1 Expert
Jan 1, 2002
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There are various types of collateral possible: land (mortgage), equipment or inventory ("prenda"), receivables ("cesi?n de cr?dito"), etc.

Now, don't make the same mistake I've seen made by some US creditors: establishing the collateral through a US contract. The collateral has to be established under Dominican law and registered in the DR according to Dominican law; otherwise, it will be very difficult, not to say impossible, to enforce.
 
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principe

Member
Nov 19, 2002
531
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Mr. Guzman, thanks for your help. This is very educational for me.

Basically a lender has a to establish collateral under dominican law, but the contract itself, excluding collateral could be drawn up under NY law.
This is usually the way banks deal with Brazilian collateral.

Dominican courts have to say that assets XYZ will be used as collateral in a transaction, thus enabling a lender to legally have recourse in the DR to said collateral.

Is my understanding correct Mr. Guzman?
 
F

Fabio J. Guzman

DR1 Expert
Jan 1, 2002
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www.drlawyer.com
No, Dominican banks can and do lend without collateral. However, if you do establish a collateral in the Dominican Republic, you have to do it pursuant to Dominican law.

For a loan without collateral under a foreign contract, you can sue directly in the DR seeking a Dominican judgment to be enforced against assets in the DR.
 
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