The lender’s credit in respect of the joint-and-several guarantor declared insolvent is contingent unless existence of payments due, but not made by the main debtor, is proven. Non-payment by the main debtor functions as a condition precedent in respect of the creation of the insolvent company’s obligation

This judgment dealt with the recognition of a credit in the insolvency of the joint-and- several guarantor. Lower court rulings on insolvency case law have differed regarding this issue, some considering the credit as contingent if the main debtor has fulfilled its obligations, while others, focusing on the joint-and-several nature of the security, have concluded that the credit should be recognized as ordinary regardless of  the  main debtor’s fulfillment or otherwise.

In this judgment, the Supreme Court upheld the same criteria as in the former decisions, concluding that the lender’s credit against the joint-and-several guarantor in the insolvency is contingent, unless existence is proven of payments due but not made by the main debtor. The security, even if agreed jointly and severally, is not only accessory but also subsidiary, and to claim against the guarantor, a non-fulfillment of the main debtor is needed (in this case, the main debtor had met its payment). As long as there is no non-payment, the lender’s credit against the joint-and-several guarantor should be recognized in the insolvency as a contingent credit. The non-payment of the main debtor is a condition precedent in respect of the creation of the insolvent company’s obligation and, therefore, article. 87.3 of the Insolvency Act9 is applicable. As a result, if the credit against the main debtor in not enforceable, normally for not having matured, the condition of the non-fulfillment of the main debtor is not met and the credit against the joint-and-several guarantor must be recognized as contingent in the insolvency of the latter.