Resolution 062/2008: Regulation on the Disposition of Assets Received from Financial Support for Forced Sale, Resolution, or Liquidation of Financial Intermediation Entities

BOARD RESOLUTION NO. 062/2008
SUBJECT: FINANCIAL ENTITIES MANAGEMENT – REGULATION ON THE DISPOSITION OF ASSETS RECEIVED THROUGH FINANCIAL SUPPORT FOR FORCED SALE PROCEDURES, RESOLUTION OR LIQUIDATION OF FINANCIAL INTERMEDIATION ENTITIES, AS WELL AS THOSE ASSETS ADJUDICATED JUDICIALLY OR RECEIVED IN DATION IN PAYMENT OF OBLIGATIONS ARISING FROM CREDIT PORTFOLIOS TRANSFERRED.

HAVING SEEN:
Law No. 1670 of October 31, 1995.
Supreme Decree No. 26688 of July 5, 2003.
Supreme Decree No. 29551 of May 8, 2008.
Board Resolution No. 069/2003 of June 23, 2003.
Board Resolution No. 046/2007 of April 9, 2007.
Report from the Legal Affairs and Financial Entities Management Departments GEF-GAL No. 315-004/2008 of May 9, 2008.

CONSIDERING:
That Supreme Decree 26688 of July 5, 2002, regulates the realization of assets received by the Central Bank of Bolivia (BCB) from financial intermediation entities in the process of liquidation, forced sale, and resolution procedures.

That Board Resolution No. 069/2003 of June 23, 2003, approved the Regulation on the Administration and Alienation of Assets under Supreme Decree 26688, establishing the modalities for the alienation of movable and immovable assets received in dation in payment for the financial support granted to Banco del Progreso Nacional S.A.M. in liquidation and the former Banco Potosí S.A.

That Board Resolution No. 046/2007 of April 9, 2007, approved the Regulation on the Administration and Disposition of Assets Received in Dation in Payment from the former BBA and Adjudication in the Recovery of Credits of said entity.

That Supreme Decree 29551 of May 8, 2008, in its sole article, replaces articles 8 and 9 of DS 26688, stating that the assets of the BCB, received as a consequence of forced sale, resolution, or liquidation procedures of financial intermediation entities and those received in credit recovery, shall be alienated or transferred through the sale of movable goods to third parties, either through open bidding or public invitation, and the disposition of immovable goods gratuitously to the General Treasury of the Nation, in the state in which they are found.

That said Supreme Decree 29551 also determines that the characteristics, terms, and conditions of the aforementioned operations, as well as operational aspects, shall be defined and expressly authorized by the Board of the BCB without the need for compatibility with the Governing Body of the System for the Administration of Goods and Services.

That in view of Supreme Decree 29551, it is necessary to have a Regulation that allows for its application and execution.

That article 54 subsection o) of Law No. 1670, and article 11 numeral 29) of the Statute of the BCB, provide that the Board has the authority to approve, modify, and interpret the Statute and its Regulations, by two-thirds of its total members, without the need for any additional administrative act.

That Report GEF-GAL No. 315-004/2008 dated May 9, 2008, from the Financial Entities and Legal Affairs Management Departments, states that the Board of the Central Bank of Bolivia has competence to regulate the disposition of said movable and immovable goods, without the need for compatibility with the Governing Body of the System for the Administration of Goods and Services.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Approve the Regulation on the Disposition of Assets Received through Financial Support for Forced Sale, Resolution, or Liquidation Procedures of Financial Intermediation Entities, as well as those Assets that are Adjudicated Judicially or Received in Dation in Payment of Obligations Arising from Transferred Credit Portfolios, whose validity shall begin on May 20, 2008.

Article 2.- Repeal Chapters III and IV of the Regulation on the Administration and Alienation of Assets under Supreme Decree 26688, approved by Board Resolution No. 069/2003 dated June 23, 2003, as well as Chapters VII, VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, and XVII of the Regulation on the Administration and Disposition of Assets Received in Dation in Payment from the former BBA and Adjudication in the Recovery of Credits of said entity, approved by Board Resolution No. 046/2007 dated April 9, 2007.

Repeal all provisions contrary to the Regulation approved by this Resolution.

Article 3.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, May 13, 2008

---

Raúl Garrón Claure

_________________________ _________________________ Gustavo Blacutt Alcalá Hugo Dorado Araníbar

_________________________ _________________________ Rolando Marín Ibáñez Ernesto Yáñez Aguilar

---

Osvaldo Nina Baltazar

ANNEX
REGULATION ON THE DISPOSITION OF ASSETS RECEIVED THROUGH FINANCIAL SUPPORT FOR FORCED SALE, RESOLUTION OR LIQUIDATION PROCEDURES OF FINANCIAL INTERMEDIATION ENTITIES, AS WELL AS THOSE ASSETS ADJUDICATED JUDICIALLY OR RECEIVED IN DATION IN PAYMENT OF OBLIGATIONS ARISING FROM TRANSFERRED CREDIT PORTFOLIOS

CHAPTER I
GENERAL PROVISIONS

Article 1. Object and Scope of Application.
The purpose of this Regulation is to govern the disposition of movable and immovable assets received through financial support for forced sale, resolution, or liquidation procedures of financial intermediation entities, as well as those that are adjudicated judicially or received in dation in payment of obligations arising from transferred credit portfolios.

Article 2. Disposition Modalities of Assets
The assets referred to in the first article shall be disposed of under the following modalities:
a) Movable assets: transfer for value to third parties. b) Immovable assets: transfer gratuitously to the General Treasury of the Nation.

CHAPTER II
DISPOSITION OF MOVABLE ASSETS

Article 3. Forms of Disposition.
The Recovery and Realization Committee for Direct Administration Assets, based on reports from the Financial Entities and Legal Affairs Management Departments for all assets, shall propose to the Board for approval one of the following forms of asset disposition:
a) Auction by open bidding. b) Public invitation.

Section I
Auction

Article 4. Auction by Open Bidding.
The auction by open bidding is a form of forced sale in favor of the best offer, through which the interested party publicly commits to pay the price offered for the good or group of goods auctioned.

Article 5. Call for Auction by Open Bidding.
Once the auction is approved by the Board, the Financial Entities Management Department, in coordination with the Administration Management Department, shall proceed to prepare the public call with the following content:
a) Identification of the Assets. b) Description and base price of the goods to be auctioned. c) Address and hours for the exhibition of the goods, inquiries, and conduct of the auction act. d) Address and hours for the distribution of bid documents. e) Amount of the bid security deposit and place of deposit.

Article 6. Publications for Auction by Open Bidding.
The calls shall be published at least once in the Official Gazette of Calls, in a newspaper of national circulation, and in another of regional circulation, at least ten (10) business days in advance of the date set for the auction act.

Article 7. Base Auction Price.
The base price of the auction shall correspond to the quick sale value established through a technical appraisal to be carried out by an expert registered with the Central Bank of Bolivia, whose registration shall not be older than one year.

Article 8. Auction Commission.
The Recovery and Realization Committee for Direct Administration Assets shall designate three of its members to form the Auction Commission. A Public Notary shall act as the auctioneer.

Article 9. Adjudication of Assets.
The assets shall be adjudicated to the bidder who made the highest offer. If there is only one bidder whose offer is equal to the base price indicated in the call, the assets shall be adjudicated.

Article 10. Record of Auction by Open Bidding.
The Public Notary must draw up a detailed record, indicating the results of each act and signing it jointly with the members of the Asset Auction Commission.
The aforementioned record and the results of the adjudication shall be brought to the knowledge of the Recovery and Realization Committee for Direct Administration Assets by the Auction Commission.

Article 11. Adjudication and Form of Payment.
Once the good is adjudicated by the Auctioneer, the Auction Commission shall deliver the corresponding certificate of adjudication.
The payment deposit shall be made within three (3) business days following the auction act.
In the event that the deposit of the price of the auctioned good is not made, the bid security deposit shall be consolidated in favor of the BCB, and the auctioned good shall be adjudicated to the second best offer.

Article 12. Incompatibility of Beneficiaries.
It is established that the following are incompatible to be adjudicated the assets disposed of in accordance with this regulation:

1. Public servants of the Central Bank of Bolivia.
2. Proposers who have a marital relationship or degrees of kinship with the public servants of the BCB who hold executive positions, and the personnel who participate directly in the process, up to the second degree of consanguinity and second degree of affinity as established in the Family Code.

Article 13. Delivery of Movable Asset.
Upon full payment of the amount established in the adjudication, the Financial Entities Management Department shall proceed to deliver the good, issuing the corresponding invoice.

Article 14. Auction by Open Bidding Declared Void.
In the absence of bidders, the Public Notary shall declare the auction call void, in which case the Recovery and Realization Committee for Direct Administration Assets shall authorize the holding of a new auction considering a reduction in the base price of 25% (twenty-five percent). If no bidders appear at the second auction act, the Recovery and Realization Committee for Direct Administration Assets shall inform the Board.

Section II
Sale by Public Invitation

Article 15. Sale by Public Invitation.
This is the sale to third parties through invitations published and sent by the BCB to potential interested parties, who may be natural (individual) or legal (collective) persons, both private and public.

Article 16. Call for Public Invitation.
Once this sales modality is approved by the Board, the Recovery and Realization Committee for Direct Administration Assets shall instruct the Financial Entities Management Department, in coordination with the Administration Management Department, to prepare the public call, with the following content:
a) Identification of the Assets b) Description and base price of the goods to be disposed of. c) Address and hours for the exhibition of the goods, inquiries, and conduct of the envelope opening act. d) Amount of the bid security deposit and place of deposit. e) Deadline date and time for submission of proposals. f) Date of communication of the result of the invitation. g) Method of proposal qualification

Article 17. Publications for Public Invitation.
The calls shall be published at least once in the Official Gazette of Calls, in a newspaper of national circulation, and in another of regional circulation, at least ten (10) business days in advance of the date set for the public call act.

Article 18. Submission of Proposals.
The Financial Entities Management Department shall be responsible for the receipt of envelopes at the place and date established in the call, for which effect it must keep a chronological record of the receipt of proposals, which must be closed upon conclusion of the deadline, in the presence of a Public Notary.

Article 19. Proposal Opening Commission.
The Recovery and Realization Committee for Direct Administration Assets shall designate three of its members to form a commission responsible for developing the public act of envelope opening in which a Public Notary will participate. This commission shall be responsible for qualifying the proposals received in accordance with the respective public call.

Article 20. Adjudication of the Asset.
The Commission shall proceed to adjudicate the asset to the interested party whose offer was the highest in monetary value.
In the event that there is only one proposal whose offer is equal to the base price indicated in the call and the specifications of the bid documents have been met, the corresponding adjudication shall proceed.

Article 21. Adjudication and Form of Payment.
Once the good is adjudicated by the Commission, the Financial Entities Management Department shall collect the respective payment and deliver the movable good, issuing the corresponding invoice.
In the event that the deposit of the price of the adjudicated good is not made within three (3) business days, the bid security deposit shall be consolidated in favor of the BCB, and the good shall be adjudicated to the second best offer.

Article 22. Void Invitation.
In the absence of bidders, the Public Notary shall declare the public call void, in which case the Recovery and Realization Committee for Direct Administration Assets shall authorize the holding of a new public call considering a reduction in the base price of 25% (twenty-five percent). If no bidders appear at the second public call act, the Recovery and Realization Committee for Direct Administration Assets shall inform the Board proposing the removal of the asset.

CHAPTER III
REMOVAL OF MOVABLE ASSETS

Article 23. Removal of Assets.
It shall be carried out according to procedures for movable assets used by the Central Bank of Bolivia.

Article 24. Causes.
The removal of assets referred to in the previous article shall be ordered for the following causes:
a) Theft, robbery, accidental loss, or shrinkage (to the extent corresponding to the shrinkage) b) Expiration, breakdowns, alterations, or verified deteriorations backed by relevant reports. c) Unusability. d) Obsolescence. e) Determination by the Board

Article 25. Procedure.
The removal of assets established by the causes indicated in the preceding article shall be subject to the following procedure:
a) The Recovery and Realization Committee for Direct Administration Assets, based on Technical and Legal reports, shall recommend to the Board the removal of assets. b) Once the removal of the asset is approved by the Board, the Financial Entities Management Department, in coordination with the Administration Management Department, shall proceed with the removal according to procedures for movable assets used by the Central Bank of Bolivia.

CHAPTER IV
DISPOSITION OF IMMOVABLE ASSETS

Article 26. Disposition Gratuitously.
The immovable assets referred to in article 1 of this regulation shall be disposed of gratuitously to the General Treasury of the Nation in the state and condition in which they are found; the BCB shall be exempt from guarantees of eviction and sanitation.

Article 27. Transfer of Immovable Assets.
The Financial Entities Management Department shall carry out the delivery of the immovable assets through notarized minutes to the National Service of State Patrimony. The Legal Affairs Management Department shall proceed to the delivery of professional passes in the case of immovable assets with pending processes.

Article 28. Transfer Expenses.
The expenses for the transfer of immovable assets, including taxes, shall be borne by the General Treasury of the Nation.

Article 29. Payment of Professional Fees.
In the case of assets adjudicated in judicial recovery processes of portfolios, the Legal Affairs Management Department shall proceed to the payment of professional fees according to the professional fee schedule, taking as the base value the adjudication value of the immovable asset.