Publications

A member state’s court entertaining an insolvency proceeding has exclusive jurisdiction to entertain clawback actions brought within the proceeding

Judgment by the Court of Justice of the European Union (CJEU), November 14, 2018

EU legislation confers exclusive territorial jurisdiction on the court in a member state that is entertaining an insolvency proceeding for any actions closely related to that proceeding, such as clawback action brought against a defendant domiciled in another member state. This increases the efficiency and speed of these proceedings, prevents forum shipping, and facilitates achievement of the aim sought in clawback actions.

Approval of an arrangement with a recomposition by less than a third or a rescheduling below three years prevents commencement of the assessment section

Judgment by the Supreme Court (Chamber One), January 31, 2019

If the approved arrangement with creditors contains either a recomposition by less than a third or a rescheduling below three years, commencement of the assessment section is not required. For this to occur it is not necessary for those “non-onerous” terms of the arrangement to be binding on all creditors, since the law expressly determines that they must apply to all creditors or to those in one or more classes.

A discrepancy between insolvent debtor and insolvency practitioner over the valuation of assets is not sufficient in itself to assess the insolvency proceeding as fault-based

Judgment by Seville Provincial Appellate Court, February 20, 2019

A difference of opinion between the insolvent debtor and the insolvency practitioner over the actual value of the assets does not, in itself, mean a serious inaccuracy in the documents accompanying the petition for an insolvency order. The insolvent debtor only has to have produced all the information the insolvency practitioner needs to make its own valuation of the assets, for it to be concluded that, by doing so, it has provided the necessary and relevant information for the insolvency proceeding to take its proper course, which prevents the shifting of liability to the insolvent company’s director.

No specific time limit in the insolvency proceeding for requesting the netting of claims

Judgment by the Supreme Court (Chamber One), March 05, 2019

There is no specific time limit or point in the insolvency proceeding for requesting a netting of claims. It does however make sense that if the requirements for netting claims were satisfied when the petition for the insolvency order was made, it should be requested early on, within a “reasonable period”. Until the netting has taken place, the creditor can notify their claim and the claim may be recognized, which does not preclude their netting right.

The Supreme Court restricts penalty clauses in insolvency proceedings

Judgment by the Supreme Court (Chamber One), March 08, 2019

In an insolvency scenario, penalty clauses must operate in relation to providing indemnification for damage and losses, but not any part of the penalty that significantly goes beyond that aim and also has a sanctioning purpose, because in this latter case all the various creditors are being punished in addition to the debtor.

The Court of Justice of the European Union (CJEU) sets case law on accelerated repayment clauses of mortgage loans under foreclosure

Judgment by the Court of Justice of the European Union (Grand Chamber), March 26, 2019

The CJEU held that the Spanish court may replace an accelerated repayment clause in a mortgage loan agreement with a provision of Spanish domestic law, if (i) the agreement cannot continue in existence following the removal of the whole clause held unfair, and (ii) the rendering invalid of the agreement as a result of the removal of the clause exposes the consumer to particularly unfavorable consequences.

For further information on this judgment see our related alert.

Late-payment interest on claims secured with a mortgage does not continue accruing after the insolvency order

Judgment by the Supreme Court (Chamber I), April 11, 2019

A specially preferred creditor is entitled to keep the total amount obtained by realizing the secured asset, to the extent of the original debt. That definition of “original debt” includes the outstanding principal, the interest accrued before and after the insolvency order, and late-payment interest, although late-payment interest only includes the amount accrued until the insolvency order.