Italy: Newsletter Abbatescianni November 2017

Last Updated: 26 January 2018
Article by Rosa Del Sindaco

~ LEGISLATION ~

Enabling Act for reforming the legal framework of insolvency and company crisis

With Senate's resolution of 11 October 2017, the Parliament has formally given mandate to the Government for a comprehensive reform on the subjects of bankruptcy and company crisis, scheduling the issuance of one or more legislative decrees throughout the next 12 months.

First among the guidelines provided to the Government for the reshaping and re-organisation of the subject is the mandate to proceed to a lexical revision implying the phasing out of the term "bakruptcy" (fallimento) in favour of "judicial liquidation" (liquidazione giudiziale), as well as the adoption of a clear-cut distinction between the definitions insolvency and company crisis.

Second to follow is the unification of the iter for acceding to the procedures applicable to the company crisis, which will differentiate only at a later stage.

Among the objectives that the Government will have to pursue, there is also the simplification of the procedure, which will take place through the adoption of a unique procedural model, substantially shaped on that already employed for bankruptcy declarations, with the jurisdiction belonging to the court of the place where the debtor entertains his key interests.

The enabling act also provides for a deeper specialisation of the judiciary that will be involved in company crisis procedures, as well as the creation of a register for professionals to be entrusted with managing and supervisory tasks in the context of bankruptcy procedures, who will have to comply with specific requirements concerning their integrity, independence and professional experience to be eligible.

The enabling act dedicates particular attention to company groups, underlining the necessity to introduce provisions that facilitate the unitary management of the crisis.

What points in the direction of a different approach towards the management of insolvency and company crises is also the introduction of benefits for those who employ these mechanisms at an early stage of the crisis.

To this end, the act provides for the creation of a body that will support the debtor in the attempt to overcome the crisis, by involving the creditors in the outline of a recovery plan, and which may as well involve qualified public creditors and the public prosecutor in case no solution is at hand.

Supervisory functions will be borne by the competent company bodies, as well as by the qualified creditors, who may end up losing their privilege in the event of inaction.

The enabling act also encompasses such institutes as the pre-bankruptcy (concordato preventivo), restructuring agreements and certified recovery plans, which in the new formulation appear to be more oriented towards business continuity: liquidation is less and less incentivised and is left as a residual option.

Key changes involve, in particular, pre-bankruptcy proceedings, reserving the admissibility to liquidation procedures for scenarios where at least the payment of 20% of unsecured credits is ensured.
The fees of the professionals appointed by the debtor will be tied to the presence of outstanding assets in the company that requires the adoption of the procedure, and the associated professional credits will benefit from anticipated deduction only in case the procedure is approved by the court.

Another relevant novelty regarding pre-bankruptcy procedures is that of the elimination of the meeting of the creditors, in favour of an on-line voting system, along with the introduction of criteria for sorting out of conflicts interest ("one head-one vote" approach in case one creditor is the sole holder of the majority of the credits admitted in the procedure).

The role of the receiver is also reshaped as a consequence of the reform.

In particular, the receiver is allowed to have access to the databases of the public administration and to promote or carry on with judicial actions that are typically reserved to the partners or to the creditors of the company (for instance: liability actions against partners who have intentionally deliberated or authorised the enactment of decisions that are detrimental to the company, and liability actions against companies or entities that exercise the direction or control of the company).

~ CASE LAW ~

Court of Rome, decision of 22 September 2016 – Attributions to the partner of a limited liability company (Srl) in convening the quota holders' meeting

The Court of Rome confirms the full legitimacy of the convening of the quota holders' meeting by the partner who is holder of at least one third of the equity capital of the company of a limited liability company (srl), even in case the by-laws attribute such function exclusively to the executive board.

The decision is grounded in the self-integration of art. 2479 of the Civil Code – and not in the application by analogy of art. 2349 of the Civil Code – which provides that, in case of inaction of the bodies in charge, the Court shall, upon prior hearing of the executive and supervisory bodies, and after the unjustified refusal to proceed in that sense, convene the meeting by decree, indicating the person who will preside it.

Art. 2479 of the Civil Code provides that the partners shall rule on subjects reserved to their competence in light of the deed of incorporation, as well as on those topics raised by one or more directors, or partners representing at least one third of the equity capital of the company.

This provision, by providing that the partners who hold at least one third of the equity capital of the company can ask for an topic to be directly discussed in the meeting – and not only that the partners deliberate on it – automatically implies that these partners can directly convene a meeting for the discussion of that same topic.

However, such prerogative is not totally free from constraints: the legitimation for such convening upon a partner who holds at least one third of the equity capital of the company exists, indeed, only in case of inaction of the executive board. Hence, the prerogative attributed to the partner is not unconditional, for it finds its justification in the inaction of the directors.

Still according to the Court, the principles embodies in art. 2479 of the Civil Code must be regarded as a mandatory warranty provided by the law as a form of protection for qualified minority partners: for this reason, the ability to convene the meeting by those who represent at least one third of the equity capital of the company survives even in case the by-laws demand that function to the executive board only.

Civil Court of Cassation, First Section, Order of 25 September 2017 no. 22280 – Sale of business and publicity duties

With this decision, the Court of Cassation has ruled on the forms of publicity that should be employed with regard to the sale of business, in particular when the operation encompasses real estate property.

It is on this particular theme that the Court has pointed out how the registration of the deed of sale in the trade registry, in light of art. 2556 of the Civil Code, shall be regarded as having a merely declaratory value, being aimed at rendering the sale opposable to third parties.

Such registration, indeed, does not resolve any conflict that may arise with regard to the ownership of the real estate assets encompassed in the business.

This kind of conflict can be resolved only on the basis of the application of the norm set forth in art. 2644 of the Civil Code, which expresses the principle by which the earliest registration of a deed of sale in the real estate registry shall be regarded as prevalent.

It unavoidably follows that, in the event of sale of a business encompassing real estate property, it is necessary to comply with the formalities that the law imposes with regard to the publicity of the sale of each single asset. Hence, the deed of sale of the real estate should be registered in the trade registry, and also in the real estate registry, for the purposes of ensuring that such deed is prevalent to any other deed that may be registered at a later stage with regard to the same property

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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