Executory Contracts (in Italian Law)

Abstract

The Reform of the Italian Insolvency Law, implemented with the decree of March 14th, 2005 n. 35 and of January 9th 2006, n. 5, contains significant elements of discontinuity compared to the former Insolvency Law of 1942. The mentioned provisions (as well as successive modifications) were profoundly altered including with reference to the instruments directed toward resolving the different problems of an enterprise’s crisis, and therefore in favor of the restructuring of the entity. Certainly, the most important insolvency procedures for companies are fallimento (i.e. liquidation) and concordato preventivo (i.e. a court-supervised arrangement between the debtor and the creditors). Both Procedures have rules on executory contracts but they are written in different ways according to the purpose of the single discipline. The aim of the ‘fallimento’ under Italian Law is only the liquidation. The goals of ‘concordato preventivo’ can be either the restructuring or the liquidation; and these two objectives can be present within the same Procedure. In the discipline of the ‘fallimento’ the principal rule on the effects of bankruptcy itself on pre-existing legal relationships is the art. 72 of the Insolvency Law that regulates in general the pending relationships. Subsequently there are in the Law some specific rules on single contracts: particularly, for instance, on contracts concerning real estate to be constructed (art. 72 bis) or on sales with retention of title (art. 73). In the discipline of the ‘concordato preventivo’ the principal rules on the effects of admission to the procedure are the art. 169 bis that regulates in general the ongoing contracts, and the art. 186 bis, §§ 3, 4 and 5 that regulates, without prejudice to art. 169 bis, the executory contracts in the Arrangement with Creditors on a Going Concern Basis. It is necessary to point out that the Italian Insolvency Law is under review from a global viewpoint. The Italian Parliament is discussing in this period the so-called “Rordorf Reform”: the Chamber of Deputies has already approved the Draft Law on February, 1st 2017 and successively transmitted the mentioned Draft to the President of the Senate on February, 31st 2017.