RENTA CORPORACIÓN: CENTRE OF MAIN INTERESTS IN SPAIN
On the advice of Cuatrecasas, Gonçalves Pereira, RENTA CORPORACIÓN REAL ESTATE S.A. (“Renta Corporación”) applied for a declaration of insolvency jointly with three of its Spanish subsidiaries (RENTA CORPORACIÓN REAL ESTATE ES S.A.U., RENTA CORPORACIÓN REAL ESTATE FINANCE S.L.U. and RENTA CORPORACIÓN CORE BUSINESS S.L.U.).
SUPREME COURT RULING NO. 44/2103, OF FEBRUARY 19, 2013: INSOLVENCY CLASSIFICATION OF FINANCE LEASE INSTALMENTS DEPENDS ON SPECIFIC PROVISIONS OF THE LEASE AGREEMENT
Supreme Court finds that where a finance lease agreement releases the lessor from liability for defects, credits resulting from payments due before the declaration of insolvency and for those falling due after it are insolvency credits
Introduction
Although distressing for the owners and employees, an insolvent businesses can represent an opportunity for a buyer. One of the benefi ts of insolvency is that it can release the underlying business (which may be profi table in itself) from debts and give a buyer the opportunity to make a fresh start.
In doing so, however, buyers should beware of the employment law risks represented by any employees who remain in the business through the insolvency process.
The Acquisition
LE PRINCIPE DE PRIMAUTE DU DROIT COMMUNAUTAIRE NE SAURAIT FAIRE ECHEC AUX REGLES TRES RESTRICTIVES DE DROIT INTERNE DES PROCEDURES COLLECTIVES (CASS. COM., 23 AVRIL 2013, F-P+B, N°12-19.184)
PROCEDURE INTERNATIONALE D’INSOLVABILITE
SEUL LE TRIBUNAL QUI OUVRE LA PROCEDURE PRINCIPALE A L’ENCONTRE D’UNE PERSONNE MORALE EST COMPETENT POUR PRONONCER UNE INTERDICTION DE GERER CONTRE LE DIRIGEANT DE CELLE-CI (CASS.COM. 22 JANVIER 2013 N°11-17.968 (N°55 F-PB), MAJOT C/ STE BECHERET- THIERRY-SENECHAL- GORRIAS ES. QUAL.)
Going through bankruptcy is traumatic enough; doing so and still having your credit report still list your discharged debts as "delinquent" is enough to drive some people to litigation. And that's how several credit agencies found themselves on the receiving end of a series of Fair Credit Reporting Act class actions.
The Madrid Provincial Court (Section 28) ruling of December 7, 2012, and the Barcelona Provincial Court (Section 15) ruling of October 4, 2012, judged the insolvency categorisation of a credit the receivers had categorised as subordinate because they held that the creditor company belonged to the same corporate group as the insolvent company.6 In both cases, the provincial courts analysed the concept of group for the purposes of insolvency before and after the reform of the Insolvency Act introduced under Act 38/2011.
The Supreme Court clarified the insolvency categorisation for interest rate swap contracts, classifying them as insolvency credits, as they fail to meet the functional synallagma requirement, which establishes functional reciprocal obligations.
Compensation of a debt made after the debtor’s bankruptcy declaration via the appropriation of securities pledged by virtue of a financial guarantee, is admitted.
The validity of a transaction assessed as “compensation” that was carried out after the bankruptcy declaration of the company in debt was questioned before the Supreme Court. The credit entity applied the value obtained from the reimbursement of an investment fund that had been pledged to secure a credit policy to reduce the debt.
JUDGEMENTS NO. 541/2012, OF OCTOBER 23, 2012, BY THE ZARAGOZA BRANCH OF THE COURT OF APPEALS, NOS. 413/2011, OF DECEMBER 19, AND 18/2012, OF JANUARY 18, BY THE BURGOS BRANCH OF THE COURT OF APPEALS, NO. 132/2012, OF APRIL 10, BY THE RULING OF THE VALENCIA BRANCH OF THE COURT OF APPEAL, AND NOS. 210/2012 AND 211/2012, BOTH OF JULY 20, BY THE ALICANTE COMMERCIAL COURT