Marine related creditors may primarily pursue arrest and seize assets such as vessels cargo, and freight. If by the time the court reaches a decision favorable to a claimant and the defendant has not been able to replace any of the seized properties then the court will have to dispose of the property through a judicial sale.
In Panama, marine judicial sales are governed and regulated in Title V, Chapter VI of Law 8 of 1982. Although principally conceived for vessel sales it is applicable to other seized property through a marine claim.
Once the court has established a date for the sale, announcements must be made public, normally through well known local newspapers and at the claimants requisition in international newspapers. The announcements must include date, time, place, vessel details and price; in regard to the latter the court must have complied with obtaining an appraisal from a reputable surveyor and available to all interested parties.
The said notification must also inform of the minimal amount to be deposited to qualify as bidder, which shall represent 5% of the appraisal. It is worth noting that although the law contemplates the possibility that recorded creditors are excluded from presenting the deposit it has become a matter of constant discussion and review by the courts which creditors can participate in a judicial sale.
During the first round it is permitted to the court and marshall to close the sale for two thirds of the appraisal, and should no such offer be available the court is mandated to appoint a second date for receiving offers, in which it may accept offers for half of the appraisal. If by the second round, the court does not receive acceptable offers a third and final date must be immediately appointed by court, in which there will be no minimum amounts established to receive offers.
Once the court marshall has provisionally awarded the sale, the bidder must comply with completion of payment within 24 hours, risking the loss of the award and his deposit if not complying.
Results of a judicial sale must be received by the court and will be destined to a special account from which it will be administered.
Upon receipt of the marshall´s expenses report the court must deduct vessel or other properties maintenance expenses; any objections to the expenses report may be presented by the creditors of record.
The remainder amounts will be distributed between the creditors of record as per the decisions and amounts awarded by the court.
In the event that the creditors claims exceed the value of the assets or properties seized, it is mandatory for the court to announce an invitation to existing creditors to formalise their claims before the court. This notification has to be made before appointing the sale date.
If the creditors of record cannot agree on the proportion and distribution of the amounts received in the sale, then the court will appoint an administrator who will distribute the sums in consideration and proportion to their ranking.
Unsatisfied creditors are entitled to appeal the Administrator s decision before the Admiralty Judge in regards to their ranking as well as any objections they may have against other creditors.
Provided that their ranking is superior, all those creditors who have not been objected by other creditors or have not appealed the Administrator s distribution award will be acknowledged by the judge and will be able to receive their award.
Dr. Juan J. Espino Sagel
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