Alteco / Mag Import Case: New Developments for Secured Creditors

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Luxembourg court decisions allow secured lenders to enforce Gecina share pledge.

A controversial insolvency dispute winding its way through courts in Spain and Luxembourg may reinforce the rights of secured lenders to enforce financial collateral within an insolvency proceeding. While the recent Luxembourg Tribunal decision enforcing a financial collateral pledge for payment default appears to favor the secured lenders, a potentially contradictory decision from the Spanish Commercial Courts throws the issue into uncertain territory.


Alteco Gestión y Promoción de Marcas, S.L. (Alteco) and Mag Import, S.L. (Mag Import) are two Spanish holding companies which, as a result of an initial tender offer for Metrovacesa, S.A., own shares in the French listed company Gecina S.A. (Gecina) — the largest residential and commercial property owner in France. In order to finance the tender offer, Alteco and Mag Import entered into a Spanish law governed syndicated facility agreement (the Facility Agreement), subsequently secured by means of a pledge over their shares in Gecina (the Pledge), which in turn was subject to Luxembourg law (in particular, to the 2005 Act which transposed the European Directive 2002/47/EC on financial collateral arrangements (the Financial Collateral Directive)).

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