Composition Agreement: Cassation n. 15713/2025 on Pending Contracts

The management of ongoing contracts during a composition agreement procedure is a matter of great importance. The Court of Cassation, with Order no. 15713 of June 12, 2025, has provided a decisive interpretation on the effects of dissolution from pending contracts, offering fundamental clarity for businesses and creditors.

Article 169-bis of the Bankruptcy Law and the Definition of a Pending Contract

Article 169-bis of the Bankruptcy Law (Royal Decree no. 267 of 1942, for proceedings initiated under its provisions) allows the debtor to request dissolution from contracts "still unperformed or not fully performed." This provision, linked to Article 72, often generates doubts about how dissolution affects performances already rendered. The Supreme Court has intervened to clarify these uncertainties.

The Clarification by the Cassation Court

Order no. 15713/2025, in the case between G. C. and M. S., established a crucial principle. The Court clarified that Article 169-bis of the Bankruptcy Law refers to contracts that have not been fully performed by both parties at the time of the composition agreement application. The following statement is fundamental:

Article 169-bis of the Bankruptcy Law, according to which the debtor may request authorization to dissolve contracts "still unperformed or not fully performed as of the date of filing the application," refers to pending contracts under Article 72 of the same law, to be understood as those that have not been fully performed by both parties at the time of filing the composition agreement application, with the consequence that the dissolution order does not affect the rights arising from the agreement in relation to performances already rendered by at least one of the parties, which continue to have their source and regulation in the contract. (In application of this principle, the Supreme Court rejected the appeal against the judgment by which the court seized for payment of performances already rendered under a works contract had declared itself incompetent due to the effectiveness of a clause derogating territorial jurisdiction).

This means that dissolution only concerns the portions not yet performed by both parties. Rights arising from performances already rendered, even partially, maintain their full validity and are governed by the original contract. The Cassation Court thus rejected the appeal, confirming the validity of pre-existing contractual clauses, such as those on territorial jurisdiction, even in insolvency proceedings for performances already rendered.

Practical Impact

This ruling has significant implications:

• Clarified Definition: "Pending contract" is limited to contracts not fully performed by both parties.
• Protection of Acquired Rights: Performances already rendered generate rights that do not cease with dissolution.
• Validity of Clauses: Agreements such as those on jurisdiction retain their effectiveness for the already performed parts of the contract.
• Strategic Planning: Companies must carefully analyze contracts to distinguish performed from unperformed parts.

The principle balances the debtor's recovery with the protection of legal certainty.

Conclusions

Order no. 15713 of 2025 by the Cassation Court is a landmark decision in insolvency law. It strengthens legal certainty by establishing that dissolution from pending contracts does not prejudice rights arising from performances already rendered. This principle is crucial for managing corporate crises. To best address these complexities, the advice of professionals experienced in bankruptcy law is always recommended.