Judgment of the Supreme Court of Justice of 1 July 2014
This judgment concludes that the Insolvency Plan is an alternative corporate recovery measure which aims to satisfy the interests of the creditors, which applies indiscriminately to natural and to legal persons. When the insolvent is a natural person, the fact that the liquidation of its assets within the insolvency proceedings took place without the full payment of the claims, is still not enough to declare the release of the debtor.
On 27 July 2014, the Regulation (UE) n.º 655/2014, of the European Parliament and of the Council (the “Regulation”), establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters was published.
Introduction
On August 28, 2014, the Court of Appeals for the Third Circuit[1] delivered a stern admonition about the risk of failing to appeal when it ruled that a union that had not filed a notice of appeal could not benefit from a successful appeal by another union in the same matter.
INTRODUCTION
On June 17, 2014, a three-judge panel of the Third Circuit Court of Appeals1 vacated a District Court’s dismissal order and resuscitated a bankruptcy appeal brought by a group of litigation creditors seeking recourse against the debtors post-confirmation.2 The Third Circuit opinion is an important reminder to both debtors and creditors that the doctrine of “equitable mootness” has limits and that confirmation of a plan does not preclude review of post-confirmation actions inconsistent with obligations in the plan.
Financial institutions are not de facto directors of the insolvent company because they do not significantly affect the performance of the insolvent company’s activity, but only ensure that certain costs do not affect the repayment of their loan.
The extension of the term for the delivery of works not authorized by the guarantor that had secured the penalty for delay does not harm it and, therefore, the guarantee is not extinguished; any increase in the penalty agreed does not extinguish the guarantee, but cannot be enforceable on the guarantor that will be liable in the terms agreed in the initial agreement. This decision discussed the effects on the guarantee of the novation of the secured obligation agreed without the guarantor’s knowledge.
The rescission was declared of a mortgage the insolvent company granted over a warehouse it owned in guarantee of the loan a credit institution had granted to a company of its group. The Supreme Court declared (i) that the contextual guarantee was for consideration and (ii) the need for proof of the profit (even indirect) of the guarantor company without merely belonging to the group sufficing, and confirmed that the rescission only affected the guarantee and not the loan.
SUPREME COURT RULING OF APRIL 9, 2014, NO. 175/2014: IN THE RESCISSION OF THE ASSIGNMENT IN PAYMENT AGREEMENT (DACIÓN EN PAGO), THE CREDIT OF THE NONDEFAULTING PARTY IS AN INSOLVENCY CLAIM AND NOT AGAINST THE INSOLVENCY ESTATE
The assignment in payment (dación en pago) of debt is an act extinguishing obligations and not a bilateral agreement. Therefore, its rescission leads to an insolvency claim for the non-defaulting party.