11.09.2020
Can a bank be responsible for the debts of the companies it refinances?
Before the insolvency proceedings, refinancing agreements between the bankrupt company and several financial entities are very common. In the bankruptcy procedure it can be decided if the refinancing entities can be considered “de facto administrator” (“de facto manager”) of the bankrupt company. If they have this role, they could be liable for corporate debts.
Por
Sanz González , María For banks, it is crucial to know whether they will be held liable for corporate debts after refinancing. If there is liability, these entities may not agree to the refinancing, making it unlikely that the debtor will avoid bankruptcy.
Contacto No te quedes con la duda, contacta con nosotros. Estaremos encantados de atenderte y ofrecerte soluciones.Who is a de facto administrator?
The “ de facto manager”, figure that is debatable that can be held by the refinancing bank, , has the following characteristics:
We can differentiate one negative and three positive elements.
The negative is that he could not have been formally appointed by the company or have that position in effect.
As for the positive elements, the following are required:
- First, that it effectively carries out activities aimed at the administration or management of the company.
- Second, to carry out these actions with full autonomy, that is, without answering to anyone else first.
- Third, that it carries out its management actions continuously and not sporadically or momentarily.
In addition, this corporate control may be carried out directly or through third parties. He will exercise full control over these third parties, being the one who really takes the corporate decisions, over the administrator by law.
This concept has been developed as such by jurisprudence, but is also defined to a lesser extent in the law. Specifically in Article 236.3 of the Law on Corporations. This precept is included in the section dedicated to the responsibility of the administrators. It provides the possibility of attributing responsibility to the director in fact.
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The homologation of refinancing agreements
Is the refinancing bank a de facto administrator?
This question has been evaluated several times in the bankruptcy proceedings.
The plaintiffs against these banks have defended that they are in fact administrators. Therefore, the refinancing banks tend to shift the cost of hiring legal advisors for these agreements to the bankrupt. Moreover, they have the balance in the bankrupt company’s current account. They make comments or recommendations on contractual clauses. They also establish payment calendars and thus influence the payment of invoices.
However, they are not considered as such by the courts. They claim that they do not meet the required conditions, since they do not carry out administrative tasks of the company. They merely enforce the terms of the refinancing agreement. They maintain a supervisory position, demanding the fulfillment of the agreement. In its recommendations, the bank does not indicate to the bankrupt what management acts should be carried out. They only expres the possible breach of contract in order to protect the interests of the debtor. This is so, because with such an agreement, the debtor gets better conditions to repay its debt to the bank. In addition to protecting its legitimate interests, that is, the recovery of the money borrowed. Because with the disposition of the current account, the income is used to repay the loan.
What would the impact be?
The main repercussion of considering the bank as a de facto administrator would be in the classification of its bankruptcy credit. Since, if that happens, the bank would be considered persons especially related to the bankrupt. In this case, their credits would be considered as subordinated. Therefore, collecting in last place if there was enough active mass. However, since they do not fulfill the role of administrator, their credits will be ordinary or privileged (depending on the case).
Similarly, the bank may incur in liability. The Bankruptcy Law establishes the administrators as possibly responsible for the bankruptcy (among others). They would thus be responsible for the bankruptcy deficit because they have aggravated the insolvency situation or are the cause of the guilty classification. In practice, the bank will not have any bankruptcy liability because it lacks the function of a de facto administrator.
Beyond the bankruptcy area, it is necessary to analyze the responsibility of the de facto administrator in the corporate area. He could be liable via article 236 LSC. In fact, if the bank did not comply with the duty of care imposed by law, would be liable as a legal administrator could be. With regard to joint and several liability for corporate debts, we must refer to Article 367 LSC. This article establishes their responsibility when the bank does not start the correct procedure for the dissolution or the bankruptcy of the company. The duty to call a General Meeting, which is imposed in such case, corresponds to the administrator by right. However, there are courts that have considered, mainly in the part of not requesting the bankruptcy, the co-responsibility. Co-responsibility between the administrator by law for not complying with this duty and the one that actually did it because he is the one who gave the order.
Conclusions
Although a de facto administrator may incur liability, this is not the case. Banks that refinance corporate debt do not fulfill the role of de facto managers. Thus, they will not have any liability for the debts of the companies they are refinancing.
If this article has been of interest, we also suggest you to read the following article published on our website: Is a Company Director responsible for the debts generated when he is not in charge?
