Posted on: 16/7/2021

    What are the limits to the application of the suspension of the obligation to reduce capital for losses in the event of an unfavourable outcome of the arrangement with creditors procedure?


    Article 182-sexies of the Italian Bankruptcy Law provides that the company’s rules for safeguarding the integrity of the share capital remain suspended from the filing of the application for admission to the arrangement with creditors until the approval, without specifying what happens if the arrangement procedure fails.


    The Court of Palermo has ruled that such suspension is to be considered conditional upon the ruling on the admissibility of the application for arrangement with creditors, in order to avoid the risk of dilatory conduct by the directors.


    Pursuant to the combined provisions of Articles 2447 and 2484 of the Italian Civil Code, if the loss suffered by a limited company exceeds 1/3 of the share capital and, as a result, the latter falls below the legal minimum, a cause for dissolution of the legal entity is deemed to have occurred. In such cases, the administrative body is required to urgently convene the shareholders’ meeting in order for the latter to assess the advisability of continuing (or not) the company’s activity, resolving to this end to increase the same capital to an amount not lower than the minimum by means of contributions suitable to cover the losses.


    Article 182-sexies of the bankruptcy law (introduced by Decree-Law No. 83 of 22 June 2012, converted into Law No. 134 of 7 August 2012) provides that from the date of the filing of the application for admission to the arrangement with creditors, also pursuant to Article 161, paragraph six, […] until the approval, Articles 2446, paragraphs two and three, 2447, 2482 bis, paragraphs four, five and six, and 2482 ter of the Civil Code shall not apply. For the same period, the cause of dissolution of the company due to reduction or loss of share capital referred to in Articles 2484, no. 4, and 2545 duodecies of the Civil Code shall not apply.


    Thus, as a result of the submission of an application for arrangement or restructuring agreement, the rules protecting the share capital are automatically suspended. This suspension applies until the decree of approval of the arrangement with creditors or of the debt restructuring agreement.


    The legislation does not provide for the applicability of such suspension to pathological cases in which the arrangement procedure has not been successful and in particular in cases in which the application has been declared inadmissible.


    The Court of Palermo recently issued Decision No. 1393/2021 of 31 March 2021. In particular, in the case under review, the insolvency administrator of a limited liability company claimed that a former director had failed to promptly call the shareholders’ meeting to adopt the measures pursuant to Article 2482-ter of the Italian Civil Code in connection with the reduction of the share capital below the legal minimum (pursuant to Article 2484 no. 4 of the Italian Civil Code) already in 2013.


    In order to exclude his liability for failure to convene the shareholders’ meeting to adopt the measures required by law, the defendant alleged that he had filed (before 2013) an application for a arrangement with creditors, a circumstance that would have led to the temporary suspension, for the entire duration of the bankruptcy proceedings, of the provisions of the Civil Code placed to safeguard the share capital under Article 182-sexies of the Bankruptcy Law.


    A part of the legal literature, based on the literal interpretation of the abovementioned provision, was in favour of the disapplication of the civil code provisions aimed at safeguarding the integrity of the share capital in the period between the date of filing of the application for arrangement with creditors (or of the debt restructuring agreement) and the date of the decision of the Court on the approval, regardless of the outcome of the relevant proceedings and therefore also in the event of a denial of the approval or even a declaration of inadmissibility of the application due to formal defects or lack of documentation.


    The Court of Palermo highlighted the risk that such an interpretation may encourage the submission of manifestly unfounded applications for arrangement with creditors – which are destined to be rejected or declared inadmissible – for the sole purpose of delaying the recapitalization of the company or, alternatively, its liquidation, with the consequent worsening of the equity deficit to the detriment of the company’s creditors.


    The Court of Palermo, in consideration of the need to avoid the risk of dilatory conduct on the part of the director, therefore interpreted Article 182-sexies of the Bankruptcy Law as meaning that the suspension of the company’s capital regulation is in any event conditional on the ruling on the admissibility of the arrangement with creditors. In this way, according to the Sicilian Court, the need for the company’s recovery and business continuity is combined with the need to safeguard the interests of the other market players that have relations with the company in crisis, first and foremost the company’s creditors; the latter would be unreasonably prejudiced if the indiscriminate suspension of the rules on capital losses were allowed.







    Expiry of business warranties in sale and purchase agreements.


    One classic issue in sale and purchase agreements relates to the right of the purchaser to be indemnified by the seller in the event of losses or unexpected liabilities suffered by the target company.


    Over the years, the courts have generally acknowledged that such a right arises only if it is specifically agreed upon in the sale contract by means of a warranty clause.


    One crucial point in these clauses concerns the beginning of the period for the purchaser to enforce the warranty.


    Where there is no contractual provision on this matter, it is still disputed whether to apply the time limits set by Articles 1497 and 1495 of the Civil Code for claiming lack of quality of the purchased goods, or the ordinary ten years’ time bar.


    The prevailing jurisprudence now holds that the clauses in question constitute autonomous agreements, to which the time limits laid down in the abovementioned articles do not apply (otherwise, according to Article 1497 and 1496 of the Civil Code, the purchaser would be bound to report defects in the goods sold within eight days of discovery, and to bring an action under warranty within one year of delivery of the goods).


    In any event, it is discretionary of the parties, pursuant to Article 2965 of the Civil Code, to determine in the contract the time limit within which the purchaser is required to claim the warranty for contingent liabilities.


    In this respect, of particular interest is the judgment of the Court of Milan No. 2327 of 19 March 2021, concerning a contractual clause which provided for the purchaser’s obligation to enforce the claim, under penalty of forfeiture, within 30 days from the knowledge of the loss or contingent liability of the company.


    In this case, the Court held that the time limit started to run from the date of the proposal for the approval of the company’s financial statements, in which a fund for deferred tax liabilities, not provided for in the previous financial statements, had been allocated.


    In fact, according to the Court, the presentation of the financial statements to the shareholders entailed knowledge of the event justifying the claim, since the purchaser controlled the company, which it was about to merge, and the sole director of the company was also a manager of the purchasing company.


    The Court, however, rejected the purchaser’s argument that the limitation period started from the date of approval of the financial statements by the shareholders’ meeting. According to the purchaser, it was only at that time that the financial statements, accompanied by the reports of the supervisory board and the statutory auditor, could be considered effective and therefore that the need to set aside the fund for deferred tax liabilities was known.


    Undoubtedly, the solution adopted by the Court is based on the “de facto” identification between the purchaser, the company and its bodies, in order to be able to affirm that the presentation of the financial statements, regardless of their formal approval by the shareholders’ meeting, entailed knowledge of the fact justifying the right to compensation. On the other hand, it can be agreed with the purchaser’s argument that only with the approval of the financial statements, complete with the reports of the supervisory board and the statutory auditor, could the condition for the claim for indemnification, represented by the provision for deferred tax liabilities, be deemed to have been met.


    Regardless of the solution adopted, the judgment in question provides an opportunity to stress the importance of the wording of the warranty clauses, also in relation to the moment from which the time limit for exercising the relative right begins.







    Act interrupting the statute of limitations: what forms and contents must it have?


    The Supreme Court of Cassation once again reminds us of the rules to be followed when drafting an act aimed at interrupting the statute of limitation. With Order No. 15140 of May 31, 2021, the Second Division of the Court of Cassation recalled that – on the subject of interruption of the statute of limitations – in order to have an interruptive effect, the deed must be formalized in writing and must contain:


    – the clear indication of the obligated party (i.e. the person assumed to be the debtor);


    – the clear indication of the claim (i.e. the right that is to be asserted); and


    – the notice or the written request for fulfilment which is suitable to manifest an unequivocal will to enforce one’s own right against the indicated subject, with the substantial effect of putting him in default.


    Therefore, the act interrupting the statute of limitations must contain a subjective element (i.e. the indication of the obliged party) and an objective element (i.e. the will to assert a right against the obliged party).


    As regards the explication of the objective element, the Supreme Court recalls that it is not a requirement subject to formalistic rigours, other than in writing, and does not therefore require the use of solemn formulas, nor the observance of fulfilments, since it is sufficient that the creditor clearly manifests his will to obtain the satisfaction of his right.


    It follows that, according to the Court of Cassation, simple solicitations without the character of intimation or an express request for fulfilment are devoid of interruptive effect.


    Also devoid of interruptive effect is the mere reservation, even if formulated in writing, to act for compensation for damages other than and in addition to those complained in the act, since it is an expression that for its generality cannot in any way be equated with an intimation or request for payment.


    After recalling what are the requirements for the valid formulation of an act interrupting the statute of limitations, the Supreme Court recalls, finally, that even the attitude and conduct assumed by the obligor can contribute to the interruption of the statute of limitations, whenever the obligor recognizes as legitimate the claim of the creditor or his conduct is substantiated in a behaviour objectively incompatible with the will to disavow it.


    Under this last aspect it is, however, well to remember that “verba volant, scripta manent“. Therefore, where the debtor does not substantiate his intention to promptly fulfil the obligation in written form, it is always advisable to take the initiative to interrupt the running of the limitation period with an interruptive act that meets the requirements mentioned by the Supreme Court.







    The Data Protection Authority imposed a fine (2.6 million euro) on a company of the Glovo Group for data processing violations in the food delivery sector.


    The Italian Data Protection Authority has fined Foodinho, controlled by Glovo, for violations in the processing of riders’ data, following an inspection activity, of which the Authority had given notice to the market, of companies operating in the food delivery sector.


    In particular, Foodinho was found to be non-compliant with the obligations set out in Regulation 2016/679 (“GDPR“), as well as with the rules on digital platforms and the Workers’ Statute.


    The data protection violations found included the absence of: (i) adequate information to workers about the operation of the delivery management algorithm, (ii) procedures aimed at ensuring the correctness of the results generated by the aforementioned algorithm, (iii) the possibility of human intervention aimed at correcting the results of the algorithm. Furthermore, the Authority considered (iv) that the software adopted by Foodinho does not allow the possibility of challenging the results produced by the software.


    In brief, the organisation of the work activity, by the entrepreneur, through innovative information tools, must follow the principles established by the GDPR, in particular the principle of transparency.


    It should be noted that the Authority’s inspection activities also led to the involvement of the corresponding Spanish authority (AEPD); as a result of the cooperation of the two activities, AEPD carried out corresponding inspections in Spain where other companies of the Glovo Group operate.


    The Italian Authority ordered the company Foodinho to adopt measures to protect its workers within 60 days from the date of the sanction, and also imposed on it the burden of adapting the algorithm to the principles of the GDPR within 90 days.


    In determining the amount of the sanction, equal to EUR 2.6 million, the Authority assessed, inter alia, the limited cooperation provided by the Company during the inspection activities and the large number of stakeholders involved (19,000 riders).


    Two considerations can be drawn from this sanction: it is always advisable to verify the compliance of company activities with the GDPR, even where some activities (and the related data processing) are carried out with the aid of IT tools; cooperation between authorities will increasingly lead to the exchange of information between authorities, so that parallel inspection activities in different EU countries will significantly increase.







    New VAT rules on distance sales starting from 1 July 2021.


    Starting from 1 July 2021, the amendments to the Directive 2006/112 /EC provided by the “VAT e-commerce package” are effective with the aim of simplifying the VAT obligations of EU taxable persons involved in intra-EU cross-border “distance sales” transactions or TBE services rendered to final consumers subject to VAT in the Member State of destination.


    The former legislation for VAT taxable persons involved in intra-EU/cross-border “distance sales” to final consumers provided the payment of VAT in the State of destination of goods to the extent that the annual turnover of sales effected in a State exceeded specific annual thresholds (varying from Euro 35.000 to Euro 100.000) set forth by each Member State. If the above thresholds were not exceeded, VAT had to be applied in the Member State of the supplier and therefore the latter was not requested to proceed with the VAT identification in the State of destination.


    On the contrary, starting from 1 July 2021, as a consequence of the new treatment provided by the “VAT e-commerce package”, a single threshold considering an annual turnover of Euro 10.000 is effective, beyond which the relevant transaction is considered relevant in the State of destination starting from the date in which the new threshold is exceeded.


    The rules to check if the Euro 10.000 threshold is exceeded are set forth by the new Art. 59-quater of the Directive 2006/112/EC stating that such annual turnover threshold applies to both distance sales and intra-EU cross-border supplies of telecommunications, broadcasting and electronic services (TBE, under the English definition) rendered to final consumers in different Member States compared to that in which the provider is established.


    The definition of intra-EU distance sales of goods is set forth by the new paragraph 4 of Art. 14 of the Directive 2006/112/EC, while TBE services are regulated by Arts. 6-bis, 6-ter and 7 of Regulation (EU) 282/2011.


    On the same time, two new VAT payment procedures are introduced representing a centralized and digital system to simplify VAT obligations in Europe. In particular, the new rules extend the range of application of the current MOSS (“Mini One Stop Shop”, formerly reserved to electronic, telecommunications, broadcasting services) to:


    a) OSS (“One Stop Shop”) applicable to the generality of provisions of TBE services rendered to final consumers (B2C), as well as to intra-EU cross-border distance sales;


    b) IOSS (“Import One Stop Shop”) for the sales to final consumers of goods imported from non-EU Member States for an amount exceeding Euro 150.


    In order to apply for the new OSS/IOSS regimes taxpayers are required to be registered with the website of the Italian Revenue Agency. On the other side, taxpayers formerly registered with the MOSS are automatically registered with the new OSS system effective from 1 July 2021.


    Legislative Decree no. 83 of 25 May 2021, implementing in Italy the above-mentioned new rules provided by the VAT e-commerce package, was published on 15 June 2021 in the Official Gazette.


    Official clarifications were made available by the European Commission with the Explanatory Notes on VAT e-commerce rules (published on September 2020) and the Guide to the VAT MOSS (published March 2021), both available on the website of the Italian Revenue Agency.






    DISCLAIMER: This newsletter merely provides general information and does not constitute legal advice of any kind from Macchi di Cellere Gangemi. The newsletter does not replace individual legal consultation. Macchi di Cellere Gangemi assumes no liability whatsoever for the content and correctness of the newsletter.




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