Evaluation on Whether the Blockage of Pledged Receivables Credited to the Concordat Debtor's Bank Account Can Be Lifted by a Court Decision under Art.287 DEBL

Abstract

As per Art.285 of the Debt Enforcement and Bankruptcy Law, any debtor who fails to perform his or her due obligations or who is under such a threat may request concordat to perform his or her obligations by way of postponement and/or reduction; or to avoid a possible bankruptcy situation. The court would then grant a provisional period and be entitled to take the conservatory measures necessary to preserve the debtor's assets (Art 285 DEBL). Although the lawmaker has abstained from listing possible measures, unblocking a blocked bank account is frequently requested in practise. If accepted, the debtor would clearly benefit from this measure. The debtor, who has already had a hard time performing his/her duties, may not overcome this financial setback without access to his/her account. However, debtors are not the only people affected by such a measure. The bank, which blocks the debtor's account, usually intends to preserve the receivable credited to that account so that it can enjoy its pledge on that receivable in case the debtor fails to fulfil its obligations. The severity of consequences that the pledgee will have to bear if the blockage is lifted is self-explanatory. Nevertheless, no unanimous opinion has been reached on whether the courts may grant this measure relying on Art.287 DEBL. The contradictory court rulings also prove this. This article aims to discuss whether Art. 287 DEBL could be the legal basis for such measures by focusing on the legal grounds presented in rulings where they are sought.