The fumus boni iuris used to justify the adoption of interim measures, involving blocking the enforcement of a financial guarantee, was counteracted since the pledge was fully enforceable under Luxembourg law, which was the governing law.
The parties had agreed to institute a financial guarantee on certain shares owned by the insolvent company and the pledge was made subject to Luxembourg law, because the account where the shares were deposited was located in Luxembourg.
A credit institution that is the indirect owner of an insolvent company’s share capital is not a person closely related to the insolvent company, unless it uses an intermediary to avoid that status.
The court ruled to allow the sale of the production unit with assignment to the acquirer of the agreements involving the insolvent companies affected by the transfer of the production unit and necessary for its continuance.
The European Commission recently published a recommendation addressed to Member States on a new approach to rescuing businesses and offering a second chance to honest entrepreneurs. It aims to ensure that viable businesses experiencing financial difficulti es have access to restructuring mechanisms at an early stage to prevent insolvency and maximise overall value for creditors, employees and owners. It also proposes a second chance for honest entrepreneurs involved in insolvency proceedings.
I FRAMEWORK OF AVAL
Legal Framework of Aval
The aval consists of a personal guarantee of obligations that is typical of debt securities – in particular bills of exchange, promissory notes and cheques – and enormously important given how often the same is used in practice in the commercial activity, namely the provision of aval to commercial companies, makers of debt securities.
Introduction: The Question
The Spanish Insolvency Act has seen its most material amendment come into effect on 9th March 2014 by Royal Decree - Law 4/2014 . The law now provides for a more flexible system and reduces equity leverage. Under the new law, it is now possible for a Refinancing Agreement (which satisfies the legal requirements for such agreement) to be court approved in a Court Homologation process which will bind dissenting creditors. In practice, 75% of Syndicated Loan creditors can now bind the remaining 25%.
(Ordonnance no. 2014-326) was published in the French official journal on 14 March 2014. The new rules apply to all proceedings that open on or after 1 July 2014 but will have an influence on current loan negotiations. It redresses the checks and balances in place by creating a double-edged sword over the heads of shareholders by reallocating rights to lenders and by enhancing lender led restructurings.
Financial entities. Royal Decree-Law 14/2013, of November 29, on urgent measures to adapt Spanish law to European Union law on the supervision and solvency of financial entities. (BOE 287, November 30, 2013)
European Union law on the supervision and solvency of financial entities (Basel III) has been incorporated into Spanish law.
Whoever acquires control of a listed company due to a conversion of debts into shares directly attributable to a court-sanctioned refinancing agreement will not have to launch a mandatory bid. This exemption applies automatically without the need for a CNMV evaluation.
INTRODUCTION