The Court of Padua (6 March 2015) ruled that the authorization can be granted – provided that it is a case of urgency as required by law – only to the extent that the interests of creditors are best protected, through a competitive sale procedure setting a reasonable timing and an appropriate data room.

The case

The Court of Padua ruled on a petition by a company under a pre-concordato regime (having filed pursuant to art. 161, sixth para., IBL a request for admission to the procedure of concordato preventivo  seeking immediate protection from creditors’ enforcement actions, reserving to file later the required documentation, proposal and plan: so-called concordato con riservaor concordato in bianco), a company requested the Court to authorize the sale of a shareholding, as an act of extraordinary administration, according to Art. 161, seventh para., IBL.

The issues

The law of concordato preventivo does not expressly provide that a sale of assets could be carried out before the liquidation phase of the procedure, after the concordato proposal has been approved by the creditors and confirmed by the Court and, least of all in the phase of the procedure following the pre-filing orconcordato con riserva, considering that in such a case no concordato plan has been structured or filed as yet.

First of all, the issue is therefore whether an authorization to sell assets is admissible at all as an act of extraordinary  administration.

Then, the Court determined whether it should only focus on the urgency of the act to be authorized (which is what Art. 161, seventh para., IBL expressly requires) or if other criteria should be taken into account and, in particular, the best protection of the interest of creditors.

Finally, the Court analysed how to specify this latter requirement in the specific case of the sale of assets in the concordato con riservaphase of the procedure.

The decision

Having considered at the outset that the sale of assets is admissible as an act of extraordinary administration, the Court concluded, in the specific case, that the sale of the shareholding was actually to be carried out on an urgency basis, concurring with the opinion of the Judicial Commissioners.

The Court also considered that a general test should be that the best possible protection of the interests of creditors – who are in a position where they could not examine (nor vote) any proposal and therefore need to be protected against any possible abuse – must always be pursued.

Then the Court remarked that for this purpose: (i) a competitive procedure must be organized in order to select the best offer, in particular when – as in the case at hand – purchasers were indicated by the company and, therefore, possible conflicts of interest  could  arise;  (ii)  the  competitive  procedure  must  provide  for (ii.1) a reasonable timing for actually allowing  any  interested  party  to  make  its  own  assessments  and (ii.2) the setting up of a proper data room in order to ensure a knowledge barely deepened of the assets on sale.

Even though, in this case, the requirements under (ii.1) and (ii.2) were not met (since the possible purchasers would have had less  than fifteen days to file their offers, without having access  to a set of information documents already prepared), the Court nonetheless authorized the sale, calling on  to the Judicial Commissioners to set the timing for the publication of the invitation to tender and the filing of the offers, and to ensure that a proper data room would be set up.


The decision of  the Court  of Padua is interesting, as it offers  useful hints for  the situation whereby the company – in the phase of the concordato con riserva– needs to urgently perform certain  acts  of liquidation which would otherwise take place later in the proceeding.

Indeed, in its application seeking authorization to the sale, the company (i) needs to provide precise reasons of urgency (by making a comparison, as it has been suggested by some commentators, between the benefit coming form the immediate sale on the one hand and the situation, on the other hand, where the sale is delayed), but is also (ii) needs to show that the interests of creditors are best protected through a competitive bid process (see, with  respect to  this test of the best satisfaction of creditors as  a general guideline, the decision of the Court of Monza of 25 July 2014).

The Court proved to be quite flexible and practical in its approach, in that – instead of refusing to authorize

the sale due to the lack of adequate timing and conditions proposed by the company – referred to the Judicial Commissioners the task of determining in the specific case the most appropriate terms for the  tender procedure.

In general, it should be checked whether the above principles can fit and be applicable in the various possible different cases and situations. By way of an example, sales may not necessarily be considered acts of extraordinary administration, with the consequence that an authorization by the Court may not be necessary: this, in particular, when the company is a real estate trading or construction company (so it was decided by the Court of Modena on 1 November 2012) and it comes to carry out the closing of sales which were already committed by the debtor as seller, before the concordato con riserva. It should be noted that, in these circumstances, the debtor should always assess whether it is more convenient to terminate the committed sale, pursuant to the remedy offered to the debtor by Art. 169-bis IBL: this would prove useful in cases when the balance of the purchase price to be collected is lower than the liquidation value of the property, keeping in mind that the estimated cost of returning the down payments made by the committed purchaser should be taken into account, which is, however, subject to the terms of the concordato proposal and, therefore, will be returned only as a share of the amount actually paid.