Madrid Commercial Court No. 6 order of October 7, 2013: acquirer of a production unit subrogated in employment liabilities because the shareholders and directors had established the company specifically to acquire the insolvent company ("Marco Aldany Case")
The court did not rule out liability for employment obligations because the partners - directors of the insolvent company wished to acquire the production unit through a company created specifically to acquire it.
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.
In past print editions of Absolute Priority, we regularly reported on developments concerning the application of Bankruptcy Code provisions to the rights of landlords that lease non-residential real property to debtors operating in Chapter 11. While these discussions typically focused on the treatment of a debtor’s rental obligations (and in particular, so-called “stub rent” owed by a debtor for the period beginning on the day that the bankruptcy petition is filed through the end of the month), considerable non-rental charges can also accrue under a lease on a postpetiti
The House Judiciary Subcommittee on Regulatory Reform, Commercial, and Antitrust Law recently held hearings regarding certain provisions of the Bankruptcy Code, including the safe harbor from preference and fraudulent conveyance claims for “settlement payments.”
On March 20, 2014, the Court of Appeals for the Eighth Circuit issued an important decision in Stoebner v. San Diego Gas & Electric Co. (In re LGI Energy Solutions Inc.), No. 12-3899, Slip Op. (8th Cir. Mar. 20, 2014) that expands the scope of the “subsequent new value” defense in lawsuits seeking to clawback alleged preference payments.