Although the application of the 4th Additional Provision of the Bankruptcy Act should not present doubts regarding the clarity of its drafting, we have found that, in practice, the debtor ends up opposing the unenforceability of the debt claiming the modification of the repayment period, or the inability to repay the loan in advance following the approval of the agreement. Both reasons have been rejected in the case discussed in the article at hand, being tried by the Court of 1st Instance No. 6 of Vitoria (decree of 5 May 2016), one of the first to rule on this issue.
Additional Provision 4.9 expressly provides that the creditor that finds themselves dragged by the recognition of the refinancing agreement and that has not signed or expressed their disagreement thereof maintains their rights against those jointly and severally liable with the debtor and their guarantors or sureties.
The legislator has intended with the aforementioned paragraph to safeguard the rights of the creditor against guarantors or sureties, since the purpose of the approval of the refinancing is none other than to protect the company which is threatened by an imminent bankruptcy situation. The former cannot benefit – except, of course, where this has been expressly accepted by the specific creditor affected – third party guarantors of the obligation that are totally unrelated to such a situation of insolvency, those guarantees therefore being thoroughly enforceable.
In the analysed scenario, (order of 5 May 2016 of the Court of 1st Instance number 6 of Vitoria), the court rejected the opposition of the guarantors against the claim made by the creditor of a loan that had been dragged due to the approval of the refinancing agreement. The defendants argued mainly that, as a result of the approval of the agreement, the debt had not expired and was therefore unenforceable. They argued that the approval of the agreement produced a kind of novation of the expiration agreed in the loan agreement, extending it over the period set out in the postponed debt agreement.
However, both grounds for opposition were rejected by the Court, which understood that the reservation made in paragraph 9 of the 4th Additional Provision regarding the possibility of the creditor reclaiming the debt of the guarantors despite the approval does not support another interpretation that allows for the completion of the warranty. This is an explicit reference made in the law (similar to that provided in Article 135 Bankruptcy Act (“BA“) with respect to the creditors´ agreement) which should be interpreted as meaning that the postponed debt contained in the agreement are personal covenants that can only be opposed by the insolvent debtor in whose consideration they received, not by third party guarantors of the obligation.
The agreement is irrelevant against the latter, because to the extent that the obligations had continued to expire and they will be defaulted on the part of the guarantors, the creditor would retain their right to perform them.
This judicial interpretation still cannot be considered definitive as we must wait for higher authorities and other Commercial Courts to rule on this issue. Nonetheless, for the moment, it could be useful at least as a precedent to be noted in light of the increase in the approval of refinancing agreements signed under the 4th Additional Provision of the BA by those creditors that, without signing the agreement, are harmed (“dragged”) by the agreement, and as a consequence will certainly attempt to recover the debt through the fulfilment of the warranty.