With the decision of 16 September 2015, No. 18131, the Court of Cassation settled a long-standing debate, ruling that the trustee can not terminate an agreement to sell real estate property, entered into by the company which is later declared bankrupt, if the purchaser has registered with the Land Registry, before bankruptcy, its claim to the Court to be transferred title to the property.
The Court of first instance granted the purchaser the requested relief, thereby transferring title to the property, pursuant to a claim which was registered with the Land Registry before the declaration of bankruptcy of the committed seller. The Court rejected the objection raised by the bankruptcy trustee, who argued that the commitment to sell the property was unenforceable because the receiver terminated the commitment according to the specific power afforded by Art. 72 IBL.
The Court of Appeals confirmed the decision, adding an order to the bankrupt company to compensate the purchaser for damages suffered due to the delay in transferring the property.
The trustee appealed to the Supreme Court.
It is debated whether the bankruptcy trustee can still exercise its termination power according to Art. 72 IBL, once the purchaser registered with the Land Registry, before the declaration of bankruptcy, its claim to have title to the property transferred by judgment of the Court, in compliance with the Art. 2932 ICC.
The Court of Cassation, first of all, makes some general remarks concerning the registration of claims based on Art. 2932 ICC, recalling that Art. 2652, first paragraph, No. 2 ICC states that the decision granting the specific relief of transferring title to property, if the claim was duly registered with the Land Registry, prevails over any other registration which comes after that of the claim.
The Supreme Court then considers that the bankruptcy trustee has indeed, pursuant to Art. 72 IBL, the right to terminate the commitment to sell property, and that the trustee can exercise such a right even if the purchaser filed a claim in court in order to obtain the specific relief of the transfer of title to the property.
The issue is, therefore, whether or not the rights attached to the registered claim of the purchaser prevail over the termination powers of the receiver.
The Supreme Court ruled that the termination right exercised by the receiver in unenforceable against the purchaser who has registered his claim with the Land Registry before bankruptcy is declared. This decision was adopted by the Joint Session of the Court, meaning that this precedent shall be abided to in future decisions of the Supreme Court.
In the past a consistent and consolidated line of cases of the Supreme Court allowed the bankruptcy trustee to terminate a commitment to sell property by a company which later is declared bankrupt, at any time until title to the property is actually transferred or the Court decision granting such a specific relief becomes final (see, for example, Court of Cassation Nos. 2703/1995, 4358/1997, 239/1999, 17257/2002 and 7070/2004).
Therefore, the registration with the Land Registry of the claim in Court for specific relief did not bar, according to these precedents, the bankruptcy trustee from enforcing his termination right.
The Supreme Court came to a different conclusion for the first time in 2004, ruling that the decision granting specific relief to the purchaser and thereby transferring title to the property to him is enforceable against the receiver, if the claim was registered with the Land Registry before the declaration of bankruptcy. Subsequent decisions of the Court of Cassation were split and some continued to follow the previous line of cases (see decisions Nos. 20451/2005, 28479/2005, 46/2006, 542/2006, 33/2008 and 17405/2009) while others followed on the footsteps of the 2004 decision (see Nos. 15218/2010, 16660/2010 and 27093/2011).