The Court of Bolzano (17 May 2016) ruled that a further a further auction with the original offeror takes place only if there are more better offers, and if there are none the sale is made to the original offeror. The Court has also confirmed previous case-law allowing a competitive sale procedure also after a concordato pre-filing

The case

Two companies made separate concordato preventivo pre-filings according to Art. 161 sixth para. IBL, after having entered into lease of business arrangements with the same company, containing irrevocable purchase offers.

The Court called a joint tender offer process pursuanto to Art. 163-bis IBL for the sale of the two business units.

The issues

In its ruling, the Court addressed several issues regarding the interpretation of Art. 163-bis IBL, in coordination with the general rules set forth by Art. 182 IBL:

  • the competitive procedure for the sale can be opened in the pre-filing phase of the concordato ?
  • the original offer put forth by the debtor remains in force after the competitive procedure takes place, if there are no better offers ?
  • what happens in case there is only one better offer, since Art. 163-bis IBL only contemplates a plurality of offers ?
  • the general rules of Articles 105 et following IBL, recalled by Art. 182 IBL with regard to the effects of the sale and the suspension of the sale, are applicable ?

The decision of the Court

The Court of Bolzano ruled that:

  • the competitive sale procedure can be run also in the phase after a concordato pre-filing;
  • the original offer remains in force and irrevocable, even if it does not meet the conditions set forth in the Court’s decree opening the competitive procedure, and the asset can be sold to the original offeror if there are no better offers;
  • in case only better offer turns out, the sale can be made to such offeror without a further auction with the original offeror;
  • in case there is a plurality of offers, an auction among bidders must take place before the Judge;
  • the rules of Art. 163-bis IBL (which are more detailed and restrictive than those of Art. 182 IBL) apply to competitive procedures after the concordato filing or pre-filing, while also Articles 105 et following IBL apply with regard to other aspects.

Commentary

With a very articulate decision, the Court of Bolzano addresses several issues stemming from the rules for competitive sale procedures in concordato preventivo. The Court adds on the line of cases (the first of which have been rendered by the Court of Forlì on 3 February 2016 and by the Court of Rovigo on 17 November 2015), allowing a competitive sale procedure also after a concordato pre-filing, although the law only refers to the offer selected by the debtor in the concordato plan, which is not the case as yet in the preliminary phase of the concordato procedure.

The Court sheds light then on several issues regarding how the competitive procedure works, and coordinates the rules set forth in Art. 163-bis IBL with the general rules of Art. 182 IBL, which are also applicable to all sales after the concordato filing or pre-filing. In particular, the Court ruled that the literal provision of Art. 163-bis IBL should be applied, providing that a further auction between bidders take place only if a plurality of better offers are tendered; thus, one can draw the conclusion that, in case only one valid offer is put forth, the sale can be made directly to such offeror. The decision deviates from the literal wording of the law, instead, where the latter seems to establish that the offer selected by the debtor may become ineffective if it does not meet the conditions set forth by the Court, allowing the sale to the original bidder if there is no valid better offer (a precedent is that of the Court of Mantua, 11 August 2016). This means that the original bidder cannot just sit and wait to see if any better offer does turn out, trusting that he can in any case take part to a further auction with any further bidders: on the contrary, the original bidder himself needs to make a further offer meeting the conditions set forth by the Court in its order, and it can purchase the asset only in case no valid offer turns out.