The interpretation of Art. 160, paragraph four of Royal Decree No. 267/1942

The Court of Florence, Bankruptcy Section ruled on the admissibility of an application for an arrangement with creditors in light of the legislative amendment introduced in the summer of 2015 with the Decree dated 11 November 2015 and published on 8 January 2016.

In the case in question, the application for an arrangement with creditors was filed on 29 July 2015, between the entry into force of Decree-Law No. 63 of 27 June 2015 and its conversion - with amendments - into Law No. 132 of 6 August 2015.

First, the Florentine Court found that this case under its review met the requirement under Art. 161, second paragraph, letter e), last sentence of the Bankruptcy Act, introduced by the 2015 amendment ("in any case, the proposal must indicate the specifically identified and economically assessable utility which the applicant undertakes to ensure each creditor"), since the applicant company had specified in detail the utility of implementing the plan and also ascribed an economic value. In this instance, the company had shown the "benefits" that could be achieved compared with bankruptcy. 

The Court then verified, considering the issue in terms of legal feasibility, the percentage of satisfaction guaranteed to unsecured creditors by the plan in light of Art. 160, paragraph four of the Bankruptcy Act, according to which "In any case the arrangement proposal must ensure payment of at least 20 percent of unsecured credit claims", specifying exactly that "the debtor must justifiably propose payment of at least 20% of the amount of unsecured credit where "justifiably" should be considered as halfway between the concept of guarantee and that of reasonable anticipation."

In this case, the proposed arrangement envisaged the satisfaction of unsecured creditors to the extent of 59.79%, and stated that, "in any case [...] the debtor will insure its creditors at least 20%."