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. The Dutch company was declared insolvent in Spain, where its centre of main interests (COM!) was located, and the credits of the creditor companies were classified as subordinated 4 in the insolvency proceeding.
Next, the creditors claimed the debt from the guarantors, with no response, so they resorted to the British Court . The guarantors opposed this because they considered that the guarantee had been discharged in application of the provisions of a rticle 97.2 LC.5 It is then that the Court assessed how such precept works with respect to third-party guarantees.
The British High Court of Justice states that the discharge of guarantees established in favour of creditors that are specially related to the debtor provided in article 97 .2 LC is not va lid with respect to third -party guarantees . In reaching this conclusion, it goes beyond the literal interpretation of the precept and supports itself on the placement of the article in the LC and on the objective of the precept under scrutiny , which, in its opinion, is to penalize those who are specially related to the debtor and act in their own interest and against the interest of the insolvency proceeding, but not against the interest of third parties.
Finally, the Court rejected the application of Council Regulation (EC) No. 1346/20006 endeavoured by the Dutch company because it considered that, while article 97.2 LC is part of insolvency legislation, the analysis of the precept, of the LC and of the Regulation itself makes it very difficult to consider that this falls within the latter's scope of application.