Scope Of The Restructuring Of Financial Institutions In Crisis vis-à-vis Their Creditors

Professional fees awarded in a lawsuit cannot be executed against all of the assets in trust in case of a restructuring of a financial institution in accordance with Section 35 bis of the Financial Institutions Law.

In re "Recurso de hecho deducido por la actora en la causa Comafi Fiduciario Financiero S.A. c/ Muravchik, Abraham Jaime" the Argentine Supreme Court (the "Supreme Court") ruled on March 15, 2011 that professional fees awarded to the counsel of the plaintiff in a lawsuit that corresponds to a litigious credit (crédito litigioso) that was transferred to a trust cannot be executed against all of the assets in trust when such trust was set up due to the restructuring of a financial institution in accordance with Section 35 bis of the Financial Institution Law No. 21,526, as amended (the "FIL").

Banco Patricios S.A. ("Banco Patricios") brought a lawsuit pursuing collection of a note issued by the defendant. The judgment recognized the right of Banco Patricios and stated that the defendant should bear all legal expenses.

Before starting with the execution of such judgment Banco Patricios was restructured in accordance with Section 35 bis of the FIL. Within such legal framework Banco Mayo S.A. undertook a number of Banco Patricios' liabilities with preferences and some of its excluded assets. Banco Mayo S.A. then set up a financial trust appointing Comafi Fiduciario Financiero S.A. as trustee (the "Trustee") and transferring such assets to it (the "Trust"). The litigious credit (crédito litigioso) mentioned above was included in those assets.

The counsel to Banco Patricios in such lawsuit considered her task finished and asked the court to award her professional fees. Then she intended to collect such fees from all of the assets of the Trust because she considered that the fees were an ancillary to the litigious credit (crédito litigioso) so transferred.

The First Instance Judge and the Court of Appeals accepted the lawyer's argument. Finally, the...