With the recent law-decree, the rules regarding suspension and termination of pending contracts in the concordato preventivo procedure have been clarified and supplemented, addressing several issues which remained unsettled. These rules should remain unchanged upon conversion into law of the decree.
The recent law-decree No. 83 of 27 June 2015 amended Art. 169-bis IBL and introduced a clear regime concerning certain issues which emerged in case-law and specified some further aspects. In particular, the following supplemental regime of suspension and termination of pending contracts in concordato preventivo should be noted:
- the application for suspension or termination can be filed by the debtor also after the initial concordato filing;
- the other party to the contract needs always to be heard on the petition filed by the debtor;
- the Court or the Judge can take evidence informally for the purposes of their decision, which has to be taken with a decree setting forth the relevant rationale;
- the suspension or termination shall take effect from the moment the decree is notified to the other parties to the contract;
- the compensation which has to be granted to the other parties to the contract for the damage following termination does not include claims for consideration of services or supplies rendered legally according to the contract, after the concordato filing (it is also clarified that these claims enjoy a super-priority, while compensation for damages is considered as a concordato claim).
The law-decree does not deal with other important issues which gave rise to significant uncertainties in case- law:
- which criteria shall be followed by the Court or by the Judge in order to decide whether or not to grant suspension or termination (i.e. if the Court should seek to balance the opposed interests of the procedure and of the other parties to the contract, or if it should simply assess whether the requested suspension or termination is functional to the implementation of the restructuring plan);
- which criteria shall be followed by the Court or by the Judge in order to determine the amount of the compensation to be paid to the other parties to the contract, and how any dispute shall be solved;
- whether Art. 169-bis IBL is applicable to revolving facilities agreements with banks based on assignment of receivables of the debtor (this is indeed the most discussed and relevant issue in practice, considering that debtors most often file Art. 169-bis IBL petitions in this respect, in order to avoid that banks may be able to be repaid of outstanding amounts advanced according to the facilities’ arrangements, keeping the amounts collected from the clients of the debtor and claim a set-off in their favour).
Termination of leasing contracts in concordato
Law-decree No. 83/2015 added a last paragraph to Art. 169-bis IBL, in order to provide a specific rule addressing the consequences of termination of leasing contracts.
The new rule follows in the footsteps of that applicable in the bankruptcy liquidation procedure, set forth in Art. 72-quater IBL: in a nutshell, the claim of the leasing company is considered like a loan repayment claim and the property of the leased asset is treated as a guarantee of such a claim. As a consequence, the leasing company is required to sell or place on the market the asset and allocate the relevant revenues to its claim for outstanding principal: if revenue is lower than the claim for principal, the leasing company will be considered as a pre-petition creditor for the balance in concordato, while on the contrary if revenue exceeds the claim, the leasing company shall pay the balance to the procedure.
An important issue has not been clarified, though, namely whether Art. 72-quater IBL is applicable to the termination of lease contracts which occurred before bankruptcy (today, also before concordato), or only as a consequence of termination during the procedure.
Entry into force
The amendments to Art. 169-bis IBL is applicable to petitions for suspension or termination of contracts filed after the date of publication of law-decree No. 83/2015 in the Gazzetta Ufficiale which occurred on 27 June 2015.