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Liability for transfer of a Group of assets (Article 479 CC)

Iason Skouzos & Partners > Practice Areas  > Civil Law  > Liability for transfer of a Group of assets (Article 479 CC)

Liability for transfer of a Group of assets (Article 479 CC)

According to Article 479 of the Civil Code, Where assets or an undertaking have been transferred by contract, the transferee shall be liable to the creditor up to the value of the elements transferred for the debts of the assets or the undertaking. The transferor’s liability is not extinguished. Any agreement between the parties which damages the lenders is void against them”.

It may be deduced from applying mutatis mutandis Article 25, second sub-paragraph, of the Civil Code and Article 4(4) of Regulation (EC) No 593/2008 of the European Parliament and the Council, of 17 June2008, on the law applicable to contractual obligations (Rome I), that, whether the person acquiring assets or an undertaking as a whole from another person becomes jointly liable with the transferor for the assets’ or the undertaking’s debts is governed, being a personal relationship established by law, by the law of the country that is most closely connected to the situation and which is most appropriate given all special circumstances, which are considered depending on the strength or otherwise of the link to the legal relationship. The connecting elements that make up the special circumstances include the place where the agreement is entered into and performed, the place where the contracting parties operate their business, and, as far as legal persons are concerned, their actual seat, even where it is different from their statutory seat. The aforementioned personal relationship (liability) established by law is not governed by the law according to which any existing promissory agreement on the transfer of assets or an undertaking (for example, sale) is considered, which is, in principle, on the basis of Article 3 of the aforementioned Regulation, the law chosen by the contacting parties.

The provisions of the first and second sub-paragraphs of Article 479 of the Civil Code, according to which: “Where assets or an undertaking have been transferred by contract, the transferee shall be liable to the creditor up to the value of the elements transferred for the debts of the assets or the undertaking. The transferor’s liability is not extinguished”, introduce mandatory by law cumulative assumption of debts, within the meaning of Article 477 of the Civil Code, thus creating a passive several obligation between the transferor and the transferee, where the former’s liability is unlimited and the latter’s is limited, namely up to the value of the elements transferred at the time of such transfer. However, establishment of such cumulative assumption of the debt requires that the transfer involves, one by one, all the elements making up the assets, either in their entirety or to the greatest extent. In addition, the transferee should have been aware of the fact that the assets included the assets in their entirety or to their greatest extent. Such knowledge is presumed to have existed where, considering the circumstances of the transfer, the transferee was aware of the transferor’s financial situation in general and could have understood that the assets transferred to it included the assets in their entirety or to their greatest extent.

According to Greek case-law, an “undertaking” also includes an operational ship, a fortiori since the most common type of exploitation of a ship is through a single-ship company.