Judgment of the Court of Appeal of Porto of February 15, 2016

Con la reforma del artículo 90.1.6.º de la Ley Concursal (LCon) dispuesta por la Ley 40/2015 se generalizó un casi entusiasta clamor entre los operadores del sector. Se consideraba que quedaba definitivamente resuelto el perverso historial con- cursal de las prendas sobre créditos futuros. Yo no lo veo tan claro y puedo imaginarme más de un modo por el que un juez concursal averso a este tipo de garantías puede arruinar aquel entusiasmo por vía de una interpretación no totalmente absurda del precepto nuevo.

The amendment to art. 90(1)(6) of the Insolvency Act 22/2003 (abbrev. LCON) by the Public Sector (Legal Regime) Act 40/2015 was welcomed almost enthusiastically by most market agents. It was felt that the inconsistent treatment bestowed on pledges of future claims (hereinafter, ‘PFC’) would finally be a thing of the past. I myself am not altogether convinced that this is the case, being able to envisage more than one way an insolvency judge, averse to this type of security interests, can dampen the aforementioned enthusiasm by way of a not overly absurd interpretation of the new provision.

Privilege bestowed on (syndicated) creditors instigating the insolvency proceedings against the debtor

Preamble

Equality among all creditors (the so-called par conditio creditorum) is a basic principle under Spanish insolvency rules. Only specific exceptions envisaged in the Spanish insolvency law allow for a particular creditor to take precedence over others in the recovery of its claims against the debtor.

Generally speaking, the following ranking applies to insolvency claims (excluding predeductible claims):

A credit institution appealed the ruling that approved the agreement claiming that the creditors meeting had allowed the presence and vote by a city council that, in its opinion, did not have such right because it was the holder of 100% of the share capital of the insolvent party.

This ruling resolved an issue originating from a personal and joint and several guarantee granted by two companies to secure the obligations assumed by a Dutch company under a junior financing agreement. In light of the Dutch company's default on one of its payments under that agreement, the creditor companies sued the debtor, and the court issued a resolution ordering the debtor company to pay the amount claimed.

Cuatrecasas, Gonrcalves Pereira has advised GRUPO EMPRESARIAL ALCO on submitting and processing the early composition agreement with the company's creditors, attaining the approval of the competent court within 10 months of the company's declaration of insolvency.

A company's insolvency is requested by three of its creditors whose credits originated from a syndicated financing agreement signed with other credit institutions. The three creditors seeking the insolvency request that they all be recognized a general privilege of 50% of their credits and that the entirety of their respective credits be considered in calculating this general privilege, excluding subordinated credits only.

This ruling resolves the financial creditors' challenge to the approval of a refinancing agreement extending the deferral stipulated and the modification of the margins added to the Euribor to them. As grounds for their opposition, they claim that the 75% majority of the financial liabilities necessary to extend the reduction of the applicable margin whereby, in their opinion, such reduction entailed debt relief was not present.

First, the court analyses whether the refinancing agreement seeking approval complies with the legal requirements envisaged in Additional Provision 4 LC and confirms this.¹³