With the decision No. 1649 of 19 September 2017 the Court of Appeals of Catania followed the interpretation according to which a spin-off is not subject to the avoiding powers of a bankruptcy receiver
A bankruptcy receiver asked to the lower Court of Catania to claw back a spin-off deed according to which the assets of the former company were assigned to a newco, because the deal is to be considered as any other assignment of assets damaging the interests of the creditors.
The lower Court granted the requested relief and the company filed an appeal.
- first of all, if the spin-off can be construed as an assignment of assets for the purposes of the avoiding powers of an insolvency receiver;
- secondly, if the special remedies available to the creditors according to Art. 2503 ICC, to oppose the spin-off before it is performed, does exclude that the creditors can also invoke later the general and subsequent remedy of the claw-back action.
The decision of the Court
The Court of Appeals of Catania ruled that claw-back actions are not available, based on the following reasoning:
- as to the first issue, the Court concluded that a corporate spin-off cannot be construed as a transfer of assets and shall instead be considered as an internal reorganization measure of the corporate structure whereby the assets (and the shares) of the company are simply “relocated” to the companies resulting from such a reorganization;
- as to the second issue, the Court concluded that the opposition according to Art. 2503 ICC, which is aimed at protecting the creditors’ rights such as the claw-back action, is to be regarded as an alternative and special remedy with respect to the latter; in particular, remedies available to creditors in the context of a spin-off (which includes also an action for damages and an action to enforce on the assets assigned to the companies resulting from the spin-off, according to Art. 2504-quater ICC) is a sufficient remedy and strikes an acceptable balance between the creditors’ rights and the need for the spin-offs (such as merges) to consolidate and no longer be subject to challenges.
The decision follows on a swinging tendency of the local Courts with respect to the issue at hand. In particular, with respect to the issue whether the spin-off involves an assignment of assets, the Court of Appeals of Catania sets against case law of other lower Courts (Tribunal of Rome 16 August 2016 and 16 March 2016, Tribunal of Pescara 17 May 2017).
More often, decisions in the sense that corporate spin-offs are not subject to claw-back actions (Tribunal of Bologna 24 March 2016, Tribunal of Rome 7 November 2016, Tribunal of Naples 18 February 2013 and Tribunal of Modena 22 January 2010) were based on the grounds that alternative and special remedies are provided by the creditors’ opposition provided by Art. 2503 ICC and by the action for damages provided by Art. 2504-quater ICC, as well as in relation to the opportunity to stabilize the outcome of the corporate organization deeds.