The fumus boni iuris used to justify the adoption of interim measures, involving blocking the enforcement of a financial guarantee, was counteracted since the pledge was fully enforceable under Luxembourg law, which was the governing law.

The parties had agreed to institute a financial guarantee on certain shares owned by the insolvent company and the pledge was made subject to Luxembourg law, because the account where the shares were deposited was located in Luxembourg.

The ruling revoked an order for interim measures that the Commercial Court adopted without hearing the other party and establishing the precautionary suspension of any type of enforcement of the financial guarantee. The creditor entities and the custodian of the pledged shares were ordered not to enforce the pledge, with no requirement for a bond to be posted by the insolvency administrators. The court held that there was a risk that the guarantee might be enforced immediately, which could jeopardise the insolvency proceedings, since the object of the guarantee constituted almost all the insolvency estate (periculum in mora). The court also considered that there was fumus boni iuris because (i) the action being challenged had been carried out within two years before the declaration of insolvency; (ii) the insolvency administrators had requested the interim measures; (iii) the novation of the secured agreement entered into by  the  parties allowing the pledge to be enforceable upon maturity of the secured obligation might be detrimental to the insolvency estate; and (iv) the financial guarantees may be subject to clawback actions in the Member State where insolvency proceedings are under way, even if the object of the guarantee is located in a different Member State.

However, in view of the evidence submitted, the provincial court reversed the decision on the grounds that (i) the fumus boni iuris was devalued given that the defendants’ opinions on Luxembourg law stated that the pledge made subject to  th is  law  was immune to clawback actions, so the pledge may not be challenged under Luxembourg law due to the insolvency proceedings starting; (ii) the amendment of the loan agreement cannot be classed as detrimental to the insolvency estate since, under Luxembourg law, the right to enforce the pledge in the event on maturity is the essence of the pledge; consequently, the pledge could have been enforced on maturity of the agreement, even if the parties had not provided for this in their agreement. The court considered that these arguments were sufficient to reject the fumus boni iuris requisite and, as a result, the interim measure had to be reversed.