On March 18, 2014, the Bank of Spain gave credit institutions consistent criteria to apply the provisions of Circular 4/2004 to restructuring transactions resulting from the refinancing agreements regulated under the Insolvency Act, complying with the stipulations of Additional Provision One of Royal Decree Law 4/2014, which assigned the drafting of those criteria to the Bank of Spain.
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.
This update focusses on the recent Supreme Court decision in Re Lehman Brothers International (Europe) concerning the application of the “contributory rule” in administration and the admissibility and set-off of contingent claims in administration
Lehmans and the contributory rule
Preamble
Most if not all of our readers will be aware of a recent spate of decisions in which the English courts have been prepared to sanction schemes of arrangements (SofAs) for foreign entities having a “sufficient connection” with England and Wales. The latest decisions in Re Magyar Telecom B.V. (03/12/2013) show just how flexible the English courts can be in finding such a connection.
The background
This update focusses upon two recent High Court decisions dealing with (respectively) the ability of the court to retrospectively extend court-appointed receiverships, and the issue of whether COMI had shifted to England for a German national seeking bankruptcy here.
Extension of court-appointed receiverships
The case of Bank of Ireland v (1) Edeneast (2) Cosgrove and (3) Maguire (17/09/2013) concerned an application by the bank to retrospectively continue and extend the appointment of a courtappointed receiver.