The ruling called for rescission of previously agreed valuations to divide a company’s assets into two portions in a process for total spin-off in favour of two pre-existing companies. One of the beneficiaries was ordered to refund the other beneficiary company (undergoing insolvency proceedings) the excess valuation the former h ad received during the total spin-off.
The Madrid and Barcelona Provincial Courts took different positions on the classification of a creditor’s credit in the insolvency of the joint and several guarantor: the former classed it as an insolvency credit; the latter classed it as a contingent claim.
These resolutions clarify the circumstances in which an appraisal certificate is required to create and amend mortgages following the reform of the Rules of Civil Law Procedure under Act 1/2013.
If severe losses and insolvency occur, the directors’ duty to seek wind -up no longer applies if the company files for insolvency and is declared insolvent. While the composition is being carried out, the duty to seek wind-up and the directors’ resulting liability will not arise.
This ruling clarifies the role of the directors’ corporate duties in the event that legal grounds can be attributed to the company for wind-up due to losses, and the obligation to file for insolvency if the company becomes insolvent.
The Supreme Court reiterates the doctrine in its rulings of February 12 and 19, 2013, although in this case, unlike the above rulings, in which the credits were classified as insolvency credits, it concluded that instalments resulting from one finance lease agreement falling due after the declaration of insolvency are claims against the insolvency estate.
In 2011, the Spanish legislator introduced the court-sanctioned refinancing agreement (‘Spanish Scheme’) in the Spanish insolvency system. While the introduction of the Spanish Scheme has been praised for providing new tools for debtors to reorganise out-of-court while addressing the collective action problem, certain of its provisions have made this instrument too rigid and, thus, ineffective for tackling Spanish restructurings.
Judgment of the Court of Appeal of Porto of 05-12-2013
Contract Termination in Favor of the Insolvency Assets – Conditional Termination – Requirements – Bad Faith – Judicial Presumption
The impending abolishment of the ancient common law self-help remedy of distress will affect landlords, tenants and insolvency practitioners.
What is Distress?
The ability of landlords to recover arrears of rent without going to Court, by instructing bailiffs to seize, impound and sell certain goods located at the premises and belonging to the tenant. This right will remain until 6 April 2014, but after that date distress will no longer be available and commercial landlords will instead have to rely on Commercial Rent Arrears Recovery (“CRAR”).
According to The Times (25 October 2013) the British Property Federation has advised landlords to take larger rent deposits to reduce losses caused by the insolvency of a tenant.
The Insolvency Service have recently reported that they are planning to launch proposals to simplify and re-order the existing Insolvency Rules, replacing them with a single set of rules fit for the 21st century. The present rules have been in force since 1986, providing a framework for the Insolvency Act 1986.