Composition Agreement and Business Continuity: Analysis of Judgment No. 22169 of 2024

In judgment No. 22169 of August 6, 2024, the Court of Appeal of Turin addressed a matter of considerable importance in the context of insolvency proceedings: the treatment of financial surplus arising from the continuation of business operations in the event of a composition agreement with business continuity. This topic is not only of great interest to legal professionals but also to companies facing crisis situations.

Regulatory and Jurisprudential Context

The composition agreement, governed by Article 186-bis of the Bankruptcy Law, allows a company to continue its operations while restructuring its debt. However, the judgment in question clarified that the financial surplus generated by the continuation of business must be considered an increase in the value of the company's productive assets. Consequently, this surplus cannot be freely distributed by the debtor but is subject to the regulations governing legitimate causes of preference.

Composition agreement with business continuity pursuant to art. 186 bis of the Bankruptcy Law - Financial surplus arising from the continuation of business operations - Distributability - Exclusion - Reasons. In the context of a composition agreement with business continuity pursuant to art. 186-bis of the Bankruptcy Law, any financial surplus determined by the continuation of business operations is to be understood as a mere increase in the value of the company's productive assets, with the consequence that, falling within the scope of the general guarantee of credit provided for by art. 2740 of the Civil Code, it is not freely distributable by the debtor but is subject to the prohibition of altering legitimate causes of preference.

Implications of the Judgment

The practical implications of the judgment are manifold:

• Creditor Protection: The Court's decision strengthens the protection of creditors by preventing the financial surplus from being used in a way that alters legitimate causes of preference.
• Clarity for Businesses: Companies in difficulty can now have greater clarity regarding the management of their finances during a composition agreement.
• Regulatory References: The judgment refers to both the Bankruptcy Law and the Civil Code, emphasizing the importance of an integrated approach in managing insolvency proceedings.

Conclusions

In conclusion, judgment No. 22169 of 2024 represents an important reference point for the regulation of composition agreements with business continuity. The Court of Appeal of Turin has placed essential focus on the financial surplus, clarifying that such surplus cannot be freely distributed by the debtor but must remain within the scope of the general guarantee of credit. This approach will not only protect the rights of creditors but also provide a clearer framework for companies involved in insolvency proceedings, promoting more responsible management of their resources in crisis situations.