The Court of Florence (November 2, 2016) confirmed that the debtor can retain part of his assets, with a view to support the company’s recovery and in derogation to principles of liability of the debtor.

The case

A company applied for concordato preventivo, based on a plan providing for, on one side, the sale of those assets not functional to the business and, on the other side, the company to continue to trade retaining those other assets which were needed for the activities to be carried on.

A law decree providing for urgent measures on guarantees, foreclosure and insolvency proceedings and aiming at restoring damages suffered by investors of banks under liquidation, was published on the Italian Official Gazette n. 59 on 3 May 2016 (the Decree). The Decree must be converted into law by the Italian Parliament by 2 July 2016 (i.e. within 60 days from the date of its publication) to become fully effective.

“Pegno mobiliare non possessorio”, an Italian floating security interest

The Court of Modena (8 February 2016) challenged precedents of the Court of Cassation ruling thatdelayed payment of secured creditors is allowed only if the timing would not be shorter in bankruptcyliquidation

The case

Introduction

Art. 57 para. 6-bis TUF (introduced by Legislative Decree No. 42/2012) provides for a special procedure of judicial liquidation of investment funds in an insolvency situation, where debts cannot be satisfied in full out of the fund’s assets, but does not state whether investment funds are eligible for concordato preventivo as an alternative to liquidation.

The issues

Creditors being now allowed to make competing concordato proposals restricts the exclusive powers of the debtor, which are now limited to the choice to commence the procedure, while on the other side it is now always mandatory that a competitive bid process is carried on for the sale of business units and assets, when the proposal of the debtor provides for an already designated buyer

Concordato competing proposals by creditors

With judgment No. 10105 of 9 May 2014, the Italian Supreme Court of Cassation ruled that trusts can be recognized inItaly, when the settlor is insolvent, only if they are consistent with the purposes of the procedure.

The Case

During the last few years, Italian bankruptcy law has been shifting from a traditional "procedural/judicial" model, based on the central role of courts called upon to safeguard the "public interest" involved in bankruptcy by actively directing the procedure and making the most important decisions, to a model that recognizes the private interests of creditors. Under the new paradigm, creditors are conferred with decisional powers, while courts maintain a principally supervisory role.

In an effort to re-­launch the economic growth, with Law Decree No. 83/2012 (so called “Decree on Development”) the Italian government, inter alia, implemented several significant changes to Italian Bankruptcy Law (legge fallimentare).

Introduction