Lisa Lacob and Victor Steinmetz successfully resist strike-out and summary judgment application in €86 million Commercial Court guarantee claim concerning collateral appropriation

In RS Lender IV, S.à r.l. v Fernando Óscar Gil Marin [2026] EWHC 2489 (Comm), Robin Knowles J largely dismissed the Claimant lender’s application to strike out or summarily dismiss key parts of the Defendant’s Defence and Counterclaim, leaving the issue of the extent of the duties a collateral taker owes to guarantors to be determined at trial.

Lisa Lacob and Victor Steinmetz (instructed by Antonio Arenas at Scornik Gerstein LLP) acted for the Defendant, a Spanish real estate developer who is being sued personally for over €86 million under an English law sponsor guarantee. The claimant lender alleges that the borrower defaulted on the loan, following which it appropriated all of the shares in the Luxembourg parent company pursuant to a Luxembourg law share pledge at nil value, leaving the full loan facility balance outstanding.

The Defendant says the appropriation should have reduced the debt by the shares’ proper value and that the lender was required to value them in a commercially reasonable manner. A separate defence is based on the prevention principle, arguing that the lender’s own conduct caused or contributed to the alleged default.

In relation to the key valuation issue, the Claimant applied for summary judgment on the basis that the terms of the sponsor guarantee mean that the proper valuation of the collateral is irrelevant to the defendant’s liability. In particular, the sponsor guarantee provides that “The obligations of the [Defendant] … under this Deed will, to the extent permitted by law, not be affected by … any failure to realise the full value of any security”. The Defendant argued in response that (i) an appropriation operates to reduce the borrower’s liability to the extent of the proper value of the shares (ii) the Claimant owed an equitable duty to the Defendant as guarantor to obtain proper value for the purposes of debt reduction (iii) Clause 5.4 of the sponsor guarantee is not directed to appropriation, where the Claimant takes ownership of the shares rather than realising their value and (iv) the Financial Collateral Arrangements (No 2) Regulations 2003 provide a fair valuation safeguard which cannot be excluded by contract.

The Court declined to determine the valuation issue summarily and the matter now proceeds to a trial starting on 23 June 2027, when the court will have to decide (amongst other things) (i) whether the statutory safeguard protects a guarantor and cannot be excluded by contract; and (ii) the scope of the duties which lenders owe to guarantors when enforcing security by appropriation rather than sale.

This case will be of interest to lenders and guarantors in secured cross-border finance transactions. It will be one of the few occasions on which the English courts will consider how the Financial Collateral Arrangements Regulations interact with the equitable duties owed to guarantors and other sureties.