On September 27, 2024, Legislative Decree No. 136 of September 13, 2024 (“Correttivo-ter”) was published in the Official Gazette. This marks the third and currently final corrective decree to the Code of Business Crisis and Insolvency.
The new corrective decree introduces substantial changes to numerous provisions of the Crisis Code. While some adjustments are stylistic or minor in nature, Correttivo-ter addresses interpretative uncertainties, incorporates established practices, and introduces long-awaited innovations for practitioners.
This article provides an overview of the major changes introduced by Correttivo-ter regarding Judicial Liquidation and the Settlement Agreement within Judicial Liquidation.
JUDICIAL LIQUIDATION
The Correttivo-ter Decree introduced several amendments to Judicial Liquidation, revitalizing its framework with the goal of expediting its proceedings, particularly in the liquidation phase.
Regarding revocatory actions, the amendment to Article 215 broadens the trustee’s authority to assign all judicial actions within their purview. This reform enables the assignment not only of revocatory actions but also indemnity and recovery actions, promoting a faster resolution of the procedure. The dies a quo for calculating the suspect period is set as the filing date of the petition under Article 40 of the Crisis Code or the commencement of the prenotative phase.
Additionally, Article 166(3) was revised to extend exemption from revocation to acts, payments, and guarantees carried out under the approved plan of a simplified arrangement, similar to certified recovery plans.
Concerning pending contracts, Correttivo-ter introduced significant changes to the rules governing preliminary sales contracts and subordinate employment relationships, further refining their legal framework.
With specific reference to the case of a preliminary sales contract registered pursuant to Article 2645-bis of the Italian Civil Code, such a contract cannot be dissolved if it involves a residential property intended to serve as the primary residence of the promisee buyer or their relatives and kin up to the third degree, or a non-residential property designated as the main place of business for the promisee buyer’s enterprise. The third Corrective Decree introduces, under Article 173, paragraph 3-bis, a provision allowing creditors to challenge the adequacy of the agreed price and to appeal the enforceability decree of the statement of liabilities under Article 206, paragraph 3, if there is a disproportion of at least 25% in the sale price set in the preliminary agreement. If the price is found to be inadequate, the contract is dissolved, and the property proceeds to liquidation unless the promisee buyer offers to pay the shortfall before the panel rules on the appeal pursuant to Article 207, paragraph 13 of the Crisis Code.
Additionally, paragraph 4 of Article 173 now provides that in the event of the trustee’s assumption of the preliminary contract, all sums paid to the debtor by traceable means prior to the opening of the procedure (and no longer only half of the amount) are enforceable against creditors. On this point, the Explanatory Report states:
“In all cases where the trustee assumes the preliminary sales contract, the property is transferred and delivered to the promisee buyer in its current state. Payments made prior to the opening of judicial liquidation are enforceable against the creditor body up to the amount that the promisee buyer can prove was paid by traceable means. Once the sale has been completed and the price fully collected, the delegated judge shall order, by decree, the cancellation of foreclosures, conservatory seizures, any other liens, and mortgages registered on the property.”
As for subordinate employment relationships under Articles 189 and following of the Crisis Code, the Corrective Decree has rationalized and simplified both the procedure for termination and the trustee’s assumption of employment relationships, introducing timelines consistent with the procedure’s requirements and respecting workers’ rights. Furthermore, it has made processes related to NASpI unemployment benefit applications more efficient, with deadlines for submitting applications starting from the point at which an individual employee is placed in a position to formalize their request, namely, from the trustee’s communication of termination or the worker’s resignation.
Turning to procedural changes, it is worth noting that the Corrective Decree, with a view to expediting liquidation activities, has amended the following rules:
Article 213 establishes a maximum duration of five years from the opening of the procedure for implementing the program, except for extensions due to particular complexity or difficulties in sales, and stipulates that unjustified failure to comply with the scheduled times constitutes grounds for revoking the trustee’s appointment.
Article 216, paragraph 2, now requires the trustee to set at least one sale attempt for real estate in the first year and two in subsequent years (whereas previously, at least three sale attempts per year were required).
As for the application for admission to liabilities, the Corrective Decree clarifies that applications for participation in the distribution of proceeds from the liquidation of pledged assets must also be filed by petition within the time limit provided in Article 201 of the Crisis Code, that is, at least thirty days before the hearing set for the examination of the statement of liabilities.
On the subject of appeals (objections, challenges to admitted claims, or revocations), the following amendments have been made to Article 207 of the Crisis Code:
i. a new paragraph 11-bis establishes that the delegated judge exercises all powers aimed at ensuring the most expeditious and fair conduct of the proceedings, granting the parties deadlines for filing briefs if necessary.
ii. in paragraph 13, the second sentence provides that “In the case of a transaction authorized under Article 132, the panel shall order the modification of the statement of liabilities accordingly.”
iii. a new paragraph 16-bis stipulates that “Following the outcome of the appeal, the trustee shall make the necessary modifications to the statement of liabilities within thirty days of the communication of the decision. Failure to comply with the provision in the first sentence may constitute grounds for revocation of the appointment.”
The jurisdiction for cases involving insufficient realizations has also been amended. Now, the delegated judge issues the decree that orders the omission of the procedure for determining liabilities, which can be appealed before the Tribunal rather than the Court of Appeal.
Finally, Article 234, paragraph 1, has been amended to allow the trustee to file a request for the closure of the procedure under Article 233, paragraph 1, letters c) and d), even in the presence of claims against other procedures for which distribution is awaited, so as to avoid incurring additional expenses that would inevitably erode any distributions in favor of the procedure.
SETTLEMENT AGREEMENT IN JUDICIAL LIQUIDATION
The third Corrective Decree also addresses the institution of the Settlement Agreement in Judicial Liquidation.
The first provision to be amended is Article 240, which has been supplemented with paragraph 4-bis to regulate proposals for settlement agreements submitted within the context of so-called unitary judicial liquidation procedures, involving a group of enterprises.
Article 241, paragraph 2, final part, has been amended concerning the examination of proposals and communications to creditors. It now provides that:
“In the case of multiple proposals being submitted, or if a new proposal is submitted before the delegated judge orders communication, all proposals shall be submitted for creditor approval unless the trustee or the creditor committee, jointly, identify one or more proposals as more advantageous.”
The corrective intervention also amended Article 244, specifying that in cases involving multiple proposals, the proposal approved by the “highest majority of admitted credits” shall be deemed approved, with chronological criteria applied in the event of a tie.
Paragraph 5 of Article 245 has also been reformulated to clarify that, in the event of a dispute, the court’s cram-down assessment concerns the treatment of claims in an amount no less than what would result from the continuation of judicial liquidation (including in cases where determining votes by tax or social security entities are contrary).
Article 246, paragraph 1, now establishes that:
“The decree approving the settlement agreement shall take effect from the date of its publication” (and no longer conditional on becoming final). Moreover, the Corrective Decree has added paragraph 2-bis, which provides that:
“When the homologation decree becomes final, appeals concerning the statement of liabilities pending before the tribunal shall be suspended. The case may be resumed by the proponent or against the proponent and will proceed under the procedures set forth in Article 207 before the same judge, who will rule on the verification of the claim or the priority cause.”
In conclusion, Article 249 has been supplemented with paragraph 1-bis:
In correlation with the amendment to Article 246, paragraph 1, it is now provided that:
“In the event of amendment or annulment of the homologation decree, all legally performed acts under the settlement agreement and the measures related thereto shall remain valid.”
Paragraph 3 has also been supplemented with the provision that:
“In the case of the sale of one or more assets included in judicial liquidation, once the transfer has been completed and the price fully collected, the delegated judge shall order the cancellation of registrations relating to preferential rights, as well as the records of foreclosures, conservatory seizures, and any other liens.”
