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.

A creditors’ composition agreement has been approved for Pescanova, and section six of  the insolvency proceedings (categorisation of the  insolvency) has not been opened, as  there is  a type of creditor whose  moratorium is less than three years and  whose debt  relief is below one third.

GRANADA  COMMERCIAL COURT NO. 1  RULING  OF MARCH 17,  2014; LOGROÑO  COURT OF FIRST INSTANCE NO. 6 DECREE OF APRIL 25, 2014; BARCELONA COURT OF  FIRST INSTANCE NO. 38 DECREE OF MAY 14, 2014; AND PONTEVEDRA COMMERCIAL  COURT NO. 2  DECISION  OF JUNE  6,  2014:  FIRST DECISIONS ON THE  SUSPENSION OF  ENFORCEMENT PROCEEDINGS UNDER ARTICLE 5  BIS OF THE INSOLVENCY ACT AFTER  ROYAL DECREE-LAW 4/2014

BARCELONA PROVINCIAL COURT (DIVISION 15)  RULING  OF APRIL  3,  2014, NO.
116/2014, AND  LA CORUNA PROVINCIAL COURT (DIVISION 4) RULING OF APRIL  22, 
2014, NO. 118/2014: ARTICLE 90.1.6 OF THE INSOLVENCY ACT REFERS TO THE PLEDGE SECURING FUTURE CREDITS

Two new decisions on article 90.1.6 of the Insolvency Act coincide in stating that the last  point of this precept refers to the pledge securing future credits, and not to the pledge over future credit rights.

(ORDONNANCE Nº 2014-326 DU 12 MARS 2014 ET DÉCRET NO 2014-736 DU 30 JUIN 2014)

La nouvelle ordonnance nº 2014-326 du 12 mars 2014 modifie avec environ 120 articles essentiellement insérés dans le Code de Commerce, le régime des entreprises en difficulté. Un décret d’application publié le 30 juin 2014 a précisé les détails de ce texte.

Nous exposons ici quelques points principaux de la réforme (liste non exhaustive) :

American Apparel has been on the watch-list for those who follow distressed retailers for quite a while.  The company, known for its provocative advertising and American-made apparel, has approximately 249 retail stores in the U.S. and 19 other countries.

On Monday, the U.S. Supreme Court refused to take up an appeal brought by Irving Picard, the court-appointed bankruptcy trustee charged with recovering assets on behalf of Madoff’s bankruptcy estate and distributing them to victims of Madoff’s massive Ponzi scheme.