Background
RS Lender IV advanced €37 million to Aster for Life SL under a €50 million facility agreement. Fernando Oscar Gil Marin guaranteed amounts owed under the facility in defined circumstances as if he were the principal obligor. Related security included a pledge over shares in Aster Lux S.à r.l.
The lender alleged that the borrower defaulted and was insolvent by April 2024. It appropriated the pledged Aster Lux shares at a nil value, accelerated the loan, and demanded payment from the borrower and then Marin. After no payment was made, the lender sued and applied to strike out parts of Marin’s Defence and his entire Counterclaim, or alternatively for summary judgment on particular issues.
Marin relied principally on prevention, merger, and an alleged undervaluation of the appropriated shares. The lender argued that the pleaded case omitted the material facts necessary to identify the conduct alleged, its legal basis, and its causal effect.
The Court’s Holding
Robin Knowles J held that the prevention case was severely under-particularised. General allegations of contrived defaults, obstructed completions, withheld funding, and bad-faith enforcement did not plead the individual material acts, dates, contractual basis, or causation required by the Civil Procedure Rules and the Commercial Court Guide. Evidence filed in response to the application could not replace a properly pleaded statement of case.
The Court struck out the merger defence and corresponding counterclaim allegations. Appropriation of the Aster Lux shares and any resulting control did not make the lender the debtor under the facility, so the repayment obligation was not extinguished by merger.
The Court declined to dispose summarily of the valuation issue. Marin had a real prospect of arguing at trial that the shares had to be valued in a commercially reasonable manner, including by reference to regulation 18(1) of the Financial Collateral Arrangements (No 2) Regulations 2003, notwithstanding the guarantee’s waiver-of-defences provisions. The Court expressed no view on the ultimate merits, but required Marin to plead that case properly in an amended Defence and Counterclaim by 9 October 2026.
Key Takeaways
- A defence must plead each material fact supporting alleged prevention, breach, and causation; broad labels and evidence served later are insufficient.
- A secured creditor’s appropriation of shares in a debtor’s corporate group does not, merely through resulting control, make the creditor the debtor or extinguish the debt by merger.
- The interaction between a guarantee’s waiver provisions and the statutory requirement for commercially reasonable valuation of appropriated financial collateral was sufficiently arguable to require a trial.
Why It Matters
The decision underscores the Commercial Court’s insistence on precise pleadings, particularly where a party alleges deliberate obstruction, misuse of rights, or bad-faith enforcement. Marin received a final opportunity to amend, with the Court warning that a further deficient pleading should attract no additional flexibility.
For lenders and guarantors, the judgment also leaves open an important question about whether contractual waivers can prevent a guarantor from relying on an allegedly improper valuation following appropriation of financial collateral. That issue will be decided on a fuller factual record at trial.