“Financial” pledges of monies deposited in accounts after the opening of insolvency proceedings

The Court of Justice of the European Union (CJEU) has just made a pronouncement on three of the most important matters open to interpretation concerning the regime applicable to financial collateral arrangements under Directive 47/2002 of the European Parliament and of the Council of 6 June 2002.1. In its judgment of 10 November 2016 (Case C-156/15), the CJEU responds to a preliminary ruling on questions referred to it concerning the interpretation of Directive 2002/47/EC on financial collateral arrangements. The case has its roots in a deposit account governed by the laws of Latvia that contains a clause according to which monies deposited at any time in the account constitute the subject matter of financial collateral pledged to the bank, covering any and all of the bank’s claims against the guarantor. In the case under consideration, several months after the account holder – a commercial company – was made insolvent, the bank debited LVL 192.30 (approximately EUR 274) as account maintenance fees for the period up to the opening of insolvency proceedings. The insolvency administrator claimed that such charge constituted a breach of the principle of equal treatment of insolvency creditors, but the Latvian courts of first instance and appeal relied on the national transposition of Directive 47/2002, which excludes financial collateral from the scope of insolvency law, to reject restitution. The Latvian Supreme Court, however, refers several questions for a preliminary ruling to the CJEU…