With respect to the interpretation of the validity, third-party effectiveness and application of a subsecation agreement, Section 510(a) directs the bankruptcy court to consider the applicable non-bank law – usually public law – as well as the terms of the agreement itself. See Collier on Bankruptcy ¶ 510.03 (16th edition 2019). If the agreement was ambiguous about the terms or extent of the subordination, a bankruptcy court may refuse to enforce it. Cf. In re Bank of New England Corp., 364 F.3d 355, 367 (1 cir. 2004) (referral of the case to bankruptcy court to determine, under New York law, whether the subset agreement actually provided for the payment of post-petition interest on priority debt before payment on subordinated debt), on application, 404 B.R. 17 (Bankr. D. Mass. 2009) (finding that the parties did not intend to make claims on the pre-petition interest rate), aff`d, 426 B.R.
1 (D. Mass. 2010), aff`d, 646 F.3d 90 (1st cir. 2011). You know the rules of agreement for past participation; You also know of some exceptions; Discover new specific cases. The lending company makes its employees available to another company to accomplish a particular task or mission. The lending company and the user company must sign an agreement setting out the duration of the provision of work, the identity and qualification of the worker, the method of determining wages, the payroll tax and the professional expenses charged by the lending company to the user company. In addition, a rider must be concluded for the “borrowed” employee`s contract, including some mandatory declarations. The rental of work is only valid if it is not lucrative.
It should therefore be distinguished from subcontracting, which does not consist solely in the posting of workers (see below). The lending company can only charge the user company for the worker`s salaries, social security costs and professional expenses. Renting lucrative work is illegal and entails high criminal and civil obligations for the company. During the leasing period, the employment contract between the employee and the lending company is neither terminated nor suspended. The worker remains one of the employees of the lending company and remains paid by it. At the end of the period of temporary work, the worker returns to his starting position within the lending company or, when this position is no longer available, a similar position. Finally, the bankruptcy court was not convinced by Junior Lender`s argument that it should be permissible to examine whether Senior Lender Argon fraudulently induced to enter into the secured credit facility and the associated subordination agreement by promising a line of credit of $US 75 million which Senior Lender never wished to provide. According to the Tribunal, the law of Delaware (which governed) does not allow the non-application of an agreement negotiated between demanding commercial actors when a party claims that there has been fraud.
Although a subordination agreement may, in certain circumstances, be abrogated as a remedy under Delaware law, the Junior Lender did not request a resignation in this case. Consequently, the subordination agreement would be applied in the event of Argon`s bankruptcy until a court decides otherwise in similar proceedings. In such a procedure, the court wrote, the Junior Lender could be entitled to the discovery of the Senior Lender “according to the usual civil rules”. Warning: “I think you know the rest of the story”.: conjunction of subordination Some shareholders of Argon (together the “Junior Lender”) also granted subordinated loans to Argon in 2015 (the “Junior Debt”).