Is the notice in the Official Gazette sufficient to prove the ownership of a receivable assigned in bulk?
The recent order of the Court of Lucca of March 26th, 2021 deals with an issue much debated in case law, that is whether the notice of publication of the assignment in the Official Gazette pursuant to art. 58 of Legislative Decree no. 385 of 1993 (“T.U.B.”) is sufficient to judicially prove the ownership of a receivable transferred to the assignee by virtue of a bulk assignment of legal relations, or whether the evidence of the legal standing to enforce such right requires the filing of the assignment deed before the Court.
The assignment of receivables, governed in general terms by Articles 1260 et seq. of the Italian Civil Code, determines a change in the ownership through the transfer of a credit right to a third party extraneous to the contractual relationship.
Article 58 T.U.B. regulates a particular form of assignment, specifically the “assignment of legal relationships that can be identified en bloc”, including receivables, which is today significantly relevant, for example, in relation to the complex market of so-called non-performing loans. Pursuant to this special discipline, favourable for the assignee, the notice formalities are simplified for the assignment of legal relationships “en bloc” where the assignees are certain supervised subjects: banks and financial intermediaries or entities, other than banks, subject to consolidated supervision of the Bank of Italy pursuant to Articles 65 and 109 of the T.U.B..
According to the supervisory instructions of the Bank of Italy, the “legal relationships that can be identified en bloc” are “receivables, payables and agreements that have a common distinguishing element; this can be found, for example, in the technical form, in the economic sectors of destination, in the type of the counterparty, in the territorial area and in any other common element”.
The innovative scope of the provision at stake mainly concerns (i) paragraph 2 of art. 58 T.U.B., according to which the assignee gives notice of the assignment by means of publication of a notice in the Official Gazette (“O.G.”), indicating the distinctive elements that allow the identification of the assigned legal relationships, the effective date of the assignment itself and, where necessary, the methods (places, times, etc.) through which any interested party can acquire information on their own situation, as well as mentioning the authorization of the Bank of Italy to carry out the transaction, if required, and (ii) paragraph 4 which states that the effects produced by the notice in the O.G. are equal to the ones vis-à-vis the assigned debtors pursuant to Art. 1264 of the Italian Civil Code, introducing a sort of “exemption” to the provisions of the Civil Code. The Bank of Italy may indicate additional forms of notice, should it deem it appropriate.
The provision does not exclude the chance for the assignee to provide for an ad personam notification to each of the assigned debtors, but rather establishes that the notice in the O.G. is on the same level as the individual notification (or acceptance) provided under Article 1264 of the Italian Civil Code.
According to the Court of Cassation, the publicity fulfilments under Article 58, paragraph 2, T.U.B. have an important role in determining the moment in which the “assignment en bloc” procedure is effective against the debtors, introducing an absolute presumption of knowledge.
However, it is debated whether the notice in the O.G. is a valid and sufficient element to give evidence of the assignee’s ownership in relation to a specific credit right included in an assignment of relationships en bloc.
According to some case law, including by the Supreme Court of Cassation, the notice in the O.G. would be sufficient to demonstrate the ownership of the receivable upon the assignee, when the published notice includes sufficient information to identify without uncertainty the relationship under dispute among those included in the scope of the assignment.
On the contrary, another part of the case law, both of territorial courts and of the Supreme Court, deems that, in case the debtor challenges the ownership of the receivable upon the alleged assignee, the mere publication of the notice in the O.G. of the assignment of receivables en bloc pursuant to art. 58 T.U.B. is not sufficient to prove that the specific credit right at issue is included within the assigned ones, since the assignee, when starting a legal proceedings, has the burden of demonstrating the inclusion of that credit right in the assignment transaction through the filing in Court of the deed of assignment, in order to provide evidence of its capacity as the party entitled to receive the requested amounts from the debtor.
By adhering to the latter case law, the Court of Lucca, with the recent order of March 26th, 2021, suspended the enforceability of an enforcement order, by sustaining the objection of lack of legal standing of the assignee, due to the failure of filing the deed of assignment of the credit right before the Court.
In light of the above mentioned case law contrast, in the event that legal action is brought to recover a receivable received through a transfer of legal relationships “en bloc”, it is advisable, as a matter of prudence, to always file the deed of assignment of the receivable – also by way of an extract of the deed, provided that it contains the essential elements of the agreement as well as those identifying the assigned credit right (name, amount, contract from which the credit right has arisen) – to evidence that the assignee is entitled to act with reference to that specific receivable assigned, in addition to the proof of the notice in the G.U. of the “en bloc” assignment, in order to avoid any objection by the assigned debtor regarding the person entitled to enforce the receivable at stake.
In view of the applicability of the publicity formalities set out in Art. 58, paragraph 2 of the T.U.B. to securitization transactions, the above shall also be taken into consideration when the party taking legal action for the enforcement of the credit right is the servicer of a SPV which is the assignee of receivables under such kind of transaction.
Will Italy finally have the new class action effective from May 2021 in the Covid-19 time?
On May 19th, 2021 the new class action, introduced by Law no. 31 of April 12th, 2019, is expected to come into force. It replaces the previous regulation contained in Article 140-bis of the Consumer Code, expanding its scope and application.
The launch of the new class action is undoubtedly much awaited for the innovations it has brought and for the interest it could arouse at the time of Covid-19.
First of all, the action can be brought by anyone and, therefore, also by companies and entities and no longer only by consumers and users, as was the case for consumer class action.
Moreover, the new class action can be used to claim for compensation or for restitution against companies and operators of public services or utilities in relation to the violation of “homogeneous individual rights”, i.e. the class rights, deriving from any kind of contractual or extra-contractual wrongdoing. Thus, the limitations provided for by the Consumer Code, which limited the application of class action only to consumer relations, producer liability and the protection of rights damaged due to unfair commercial practices or anti-competitive conducts, have been removed.
Hence, it seems that the new class action has what it takes to be considered a “real” class action.
Another innovation is represented by the opt-in system, the opt-in is allowed even after the decision granting the action.
Finally, it will be easier to have knowledge of the action, to opt-in and monitor it, since all the Court submissions and decisions will be published in the Telematic Services Portal on the website of the Ministry of Justice.
What’s expected is that the new class action may be chosen by many to bring the so-called, and already incoming, Covid Litigations, being understood, however, that such action applies only to conducts carried out after its entry into force and that the infringed individual rights must be classifiable as homogeneous.
The entry into force of the new regulation has been postponed several times, also to allow the Ministry of Justice to adapt the IT systems for the advertisement and the procedural activities and, also in consideration of the Covid emergency, a further postponement cannot be ruled out.
The burden of proof of the corporate creditor in liability actions against directors.
In addition to the proof of the unsuccessful enforcement of the company’s assets, liability actions that are brought about by corporate creditors against the director of a company because of the non-payment of a credit require rigorous proof of wilful or negligent conduct by the directors, of damage and of the causal link between this conduct and the damage suffered by the corporate creditor.
According to the prevailing case law of the Court of Cassation, a company’s breach of contract does not automatically imply the directors’ liability for damages to the other contracting party, since such liability, which is a tort liability, requires proof of a wilful or negligent conduct by the directors, of the damage caused and of the causal link between that conduct and the damage suffered by the corporate creditor.
According to the Court of Cassation, non-performance or poor administration of the company’s assets are not, in themselves, sufficient to give rise to a liability action (Court of Cassation no. 15822/2019).
The Supreme Court holds, in fact, that the liability action brought about by corporate creditors against the directors requires evidence that – as a result of the breach of the duties imposed on them by law and by the deed of incorporation – the general guarantee on the corporate assets has been lost (Cass. no. 28613/2019).
The corporate creditor will therefore have to prove that the non-payment of its claim due to the loss of the general guarantee, represented by the company’s assets, is attributable to the directors as a consequence of the breach of their obligations.
More recently, and in line with these principles, the Court of Milan, Specialised Section on Corporate Matters, by Decision no. 17388/2020, rejected the liability action brought about by the corporate creditor against the director of a company since it did not consider the damage and the causal link with the charges against the director to be proven unequivocally, as well as on the basis of the accounting data in the financial statements.
Hence particular attention shall be paid to the burden of proof placed on the corporate creditor, which may be difficult and challenging, especially in situations of past and overall difficulty of the debtor company.
The Supreme Court has yet again expressed itself on the issue of indirect taxation of trusts.
In terms of trusts, in the event that all the beneficiaries renounce their legal position and the deed of settlement does not provide anything for this eventuality, the transfer of assets in favor of the settlor shall be subject to a fixed fee instead of registration tax, as well as mortgage and property taxes. This is the important principle established by the Court of Cassation through decision no. 8719 of March 30, 2021, which in addition to confirming the recent (from 2019) and now consolidated viewpoint expressed by the case law, seems to be (finally) also endorsed by the Italian Revenue Agency.
Decision no. 8719 of March 30, 2021 contains the latest episode, in chronological order, of the case law regarding the indirect taxation of the asset movements inherent in a trust.
The case in question derives from the notification of an assessment notice requesting higher mortgage and cadastral taxes, on a proportional basis, due on the value of the assets transferred back to the settlors due to the termination of two trusts set up in 2006 and governed by the Jersey Law (Trusts Jersey Law 1984).
In particular, the beneficiaries of the aforesaid trusts had renounced their legal position, with the result that the ownership of the assets bound in trust was reverted to the settlors, both because this was stipulated in the trust deed and also because the Jersey Law provides for the restitution of the trust assets to the settlors in the event of the lack of beneficiaries.
According to the Court of Cassation, the reattribution in question is an operation that does not consist in any transfer of wealth in favor of the settlers. The formal re-transfer of ownership of assets, in fact, is a fiscally “neutral” act, which, as such, cannot be subject to the payment of taxes that presuppose economic capacity. Therefore, the application of indirect taxes (registration, mortgage and cadastral taxes on a proportional basis) is not sustainable, because proportional taxes presuppose an actual enrichment of the beneficiary in accordance with the constitutional principle of the taxpaying ability pursuant to art. 53 of the Constitution.
One should consider that in adhering to this principle, even in the event that the settlor is among the various beneficiaries of a trust, the share of the patrimony which, according to the deed of settlement is transferred to the beneficiary (settler), is still not however subject to the gift tax.
The viewpoint expressed by the Court of Cassation, in addition to confirming the recent (from 2019) and now consolidated opinion expressed by case law, also seems to be (finally) endorsed by the Italian Revenue Agency whereby, through its answer to ruling no. 106 of February 15, 2021, clarified that the gift tax is not applicable to the act of re-transferring the ownership of assets devolved in trust, arguing that “with regards the case in question, the circumstance where the settling party coincides with the beneficiary of the trust deserves to be taken into account“.
The absence of an inter-subjective transfer precludes, therefore, the application of the gift tax due to the lack of the objective prerequisite provided by the legislation on the subject, given that there is no transfer of wealth (also stated by the Court of Cassation, through ordinance no. 3986 of February 16, 2021).
In the light of the above, we await further ministerial guidelines that may provide a remedy to the transitional issues, especially with reference to trusts that have already discounted the gift tax when having contributed assets to the trust.
Arrangement with creditors and debt restructuring agreements: coercive approval of tax and contribution transactions – recent legislative changes and interpretative guidelines.
Following the recent reform of articles 180 and 182-bis of the Italian Bankruptcy Law, the Court may approve an arrangement with creditors or a debt restructuring agreement even in the absence of the support or, respectively, the vote of the tax authorities or social security institutions, if the proposal is convenient for them pursuant to article 182-ter of the Bankruptcy Law and the rejection of the proposal is decisive for the purposes of not reaching the percentages required by law.
The doctrine and the jurisprudence of merit are questioning the scope of the changes introduced and, also in light of the principles expressed by the United Sections of the Supreme Court, it seems to consolidate an extensive interpretation of the rules whereby the Court may proceed with the approval even in the event of an explicit refusal by the tax authorities or social security institutions, thus configuring a “compulsory” approval.
Law no. 159 of 27 November 2020, published in the Official Gazette on 3 December 2020 and in force since 4 December 2020, converted into law Decree-Law no. 125 of 7 October 2020, containing urgent measures related to the extension of the declaration of the state of epidemiological emergency by COVID-19 and for the operational continuity of the COVID alert system, as well as for the implementation of Directive (EU) 2020/739 of 3 June 2020.
Article 3, paragraph 1-bis of Decree-Law No. 125/2020, amended the provisions of Articles 180 and 182-bis of the Bankruptcy Law by introducing the mechanism of the so-called “adhesion ex officio” by the tax authorities and social security institutions, which are therefore considered “in favour” of the arrangement with creditors or “adherents” to the debt restructuring agreement, if the following two conditions are met:
(a) the adherence of the aforesaid entities must be decisive for the purposes of reaching the majorities provided for by Article 177 of the Bankruptcy Law (for the arrangement with creditors) or Article 182-bis, paragraph 1, of the Bankruptcy Law. (for the debt restructuring agreement);
(b) the prospect of satisfying the credit is more convenient for these entities compared to the liquidation alternative, according to the report of the professional ex art. 161, paragraph 3, Fall. (for the arrangement with creditors), art. 182-bis, paragraph 1, Bankruptcy Law. (for the debt restructuring agreement) and Article 182-ter, paragraph 5, of the Bankruptcy Law (under which the convenience of the treatment of tax and social security receivables proposed to the tax authorities and social security institutions within the framework of the settlement is subject to specific assessment by the Court).
Following the amendment, a debate is taking place in jurisprudence and in doctrine on the power attributed by the above mentioned rules to the Court to approve the tax and social security contribution settlement “also in the absence of vote” (in the arrangement with creditors), or “also in the absence of adhesion” (in the debt restructuring agreement), of the tax and social security authorities to the settlement proposal formulated to them.
According to the “restrictive” view, the Court would have the power-duty to intervene in lieu only when, in the presence of a proposal convenient under Article. 182-ter of the Bankruptcy Law, According to a third “intermediate” hypothesis, finally, the substitutive power of approval of the Court would apply both in case of failure to pronounce and in case of rejection of the proposal in the context of the debt restructuring agreement, but not also in the context of the composition agreement.
The order of 25 March no. 8504 of the Sections of the Court of Cassation, establishing that the rejection by the Inland Revenue of the tax settlement proposal can be challenged before the Bankruptcy Court (not before the Tax Commission), contains useful elements to settle the interpretative contrast on articles 180 and 182-bis of the Bankruptcy Law. The Supreme Court has affirmed, among others, the following principles: (i) in the tax transaction the bankruptcy rationale prevails over the tax rationale; (iii) Articles 180 and 182-bis of the Bankruptcy Law identify the bankruptcy judge as the court of jurisdiction. (iii) the bankruptcy court is the competent court to rule on the appealability of the non-acceptance of the tax settlement proposal; (iii) the tax settlement represents the need to balance the tax interest with the bankruptcy interest, so that the discretion granted to the tax authorities in entering into settlement agreements is balanced by the judicial review of the refusal to accept the settlement proposal, which is assigned to the ordinary bankruptcy judge.
Articles 180 and 182-bis of the Bankruptcy Law should, according to the first commentators, be interpreted in an extensive sense in the light of the principles expressed by the Court of Cassation with the above mentioned order: according to the interpreters, the legislator intended to introduce into the Bankruptcy Law provisions which make the judicial protection of the debtor company effective, not only when the tax authorities do not pronounce but also when they pronounce contrary to the principles of Article 182-ter of the Bankruptcy Law, since – precisely in this case – it is necessary both to verify the compliance with the law of their pronouncement and whether the measure they issued correctly expresses the tax interest, and to balance the tax interest expressed by them (if it is correctly expressed) with the insolvency interest, which is prevalent. The task of carrying out such verification and balancing of interests is entrusted to the insolvency court.
In the meantime, the first rulings of the courts of merit on the “substitute” activity of the Court in the event of failure to express the taxpayer’s vote have been reported. In particular, the Court of Naples, by decree no. 2190/2021 of 9 April 2021, approved an arrangement agreement with INPS despite the negative vote of INPS, applying articles 180 and 182-ter of the Bankruptcy Law, as it considered that, on the basis of the findings of the professional report, “the credit was satisfied by the arrangement to an extent not less than the alternatives actually feasible“.
Vaccinations in the workplace: utopia or imminent reality?
At the time the Government and Social Partners signed the shared protocol on “measures to combat and contain the spread of COVID-19 in the workplace” on March 14, 2020 which was subsequently updated on April 24, it would have seemed utopian to envisage the possibility for employers to have their employees vaccinated. Yet science has performed a miracle and obtained vaccines in record time, even though not without hiccups.
And so, just after a year from the start of the pandemic, at the same time the shared protocol just mentioned was being updated, on April 6, 2021 the “National Protocol for the implementation of business plans aimed at the activation of extraordinary points of vaccination against SARS-CoV-2/Covid-19 in the workplace” was signed.
In the days immediately following, the Ministry of Labor and the Ministry of Health, together with INAIL and the Extraordinary Commissioner for the Covid emergency developed and made public “interim indications” for companies wishing to join the initiative.
Among the various indications provided, it should be noted that vaccination in the company is an additional opportunity compared to the ordinary mode of vaccination that must still be guaranteed, in accordance with the timing dictated by the national plan, in cases where workers do not wish to adhere to the vaccination in the company.
In addition, the participating company must have the following pre-requisites:
(i) a sufficiently large working population, i.e., preferably over 50 units. For employers with a small number of workers, it will be possible to make use of the support of trade associations, or bilateral bodies, in order to involve and aggregate more companies;
(ii) the headquarters in the territory of the health company that provides the vaccines;
(iii) an organizational structure, also in terms of tools and personnel, appropriate for the volume of activity expected, to ensure the smooth running of the activity and avoid assemblies;
(iv) suitable computer equipment to ensure the correct and timely registration of vaccinations;
(v) the availability of environments – indoor, outdoor or mobile – assessed as suitable by the Health Authority that provides the vaccine, compared to the number of vaccinations to be performed.
It seems very appropriate to specify that all charges are borne by the employer, or by the trade associations of reference on its behalf, with the exception of vaccines, syringes and needles. In actual fact when reading another part of the same document, it would have been legitimate to reach the opposite conclusion since it is specified that the vaccination carried out in the workplace “is a public health initiative, aimed at protecting the health of the community and not strictly related to prevention in the workplace. Therefore, the general responsibility and supervision of the entire process remains with the Regional Health Service … “.
Undoubtedly it is appreciable that, in the intent of the national vaccine plan, this initiative can contribute to obtaining a “significant gain in terms of timeliness, effectiveness and level of adherence” compared to the ordinary vaccination campaign. It is even more appreciable to allow employers to offer a higher level of protection in the workplace, especially when thinking of all those workers who must necessarily work “being physically present “, even when the right distance cannot always be constantly guaranteed.
There is, however, a point that may give rise to some perplexity: anyone who attended the press conference of April 8 by Prime Minister Draghi cannot forget the invective against young people who were vaccinated even though without frailty, and their vaccinators (“... with what conscience does a young person jump the list and get vaccinated knowing this will put those over 75 years at risk of death?“).
Yet, while the national plan imposes an order of priority during the ordinary course of vaccination, according to categories of age or disease, in the one organized by companies, the same plan allows them to proceed regardless of the workers’ age provided that there is availability of vaccines.
Evidently there are no scruples of conscience to vaccinate young people if there is ample availability of vaccines for all. At this point we “only” have to wait that the regions have a number of vaccines available that is so large so as to be able to allocate some to companies.
Meanwhile, all parties involved (e.g. employers’ associations, doctors, regions) are already discussing and will have a lot to do to solve some practical problems of implementation of the plan. Just think of the skepticism of company doctors to be involved as possible vaccinators, with all the responsibilities that could result, or the need to provide for the availability of adequately trained medical personnel to intervene in case of emergency.
Overruling and mandatory mediation in injunction opposition proceedings.
In its decision No. 19596 of 18 September 2020, the Joint Chambers of the Supreme Court of Cassation took a position on the identification of the person required to initiate mediation, as a condition of admissibility, in proceedings opposing an injunction.
Prior to this judgment, the prevailing view was that the party required to file the application for mediation was the opposing debtor, and that, failing this, the proceedings opposing the injunction should be declared inadmissible. According to this interpretation, after the declaration of inadmissibility the injunction for payment became final. Such interpretation was endorsed by two judgments of the Court of Cassation (no. 24629/2015 and no. 22003/2019).
A minority opinion, on the other hand, held that it was the opposing creditor who had to initiate the mediation procedure, and that, if he failed to do so, the revocation of the injunction would follow the ruling that the opposition was inadmissible.
The decision of the Joint Chambers to follow this second minority approach has raised the question of the outcome of pending opposition proceedings in which the time limit for initiating mediation has expired without any of the parties having filed the relevant application.
In particular, the question is whether, through this judgment, the Court of Cassation have carried out a case-law overruling, which justifies the request of the opposing creditor for a remittance within the time limit.
The rule of overruling applies when, with respect to a procedural rule, the Court of Cassation changes its position in an unforeseeable way, establishing a new interpretation which results in a preclusion or a lapse of time for the party that had unwittingly relied on the previous position. In such a case, the new interpretation applies for the future, but the party who had relied on the earlier interpretation is entitled to be remitted within the time limit.
The existence of these conditions was expressly recognised by the Court of Salerno in its order of 18 November 2020, and by the Court of Naples, more concisely, in its order of 3 December 2020.
On the other hand, in its recent judgment of 4 March 2021, the Court of Appeal of Rome upheld the debtor’s appeal seeking a declaration not only of the inadmissibility of the opposition proceedings due to the failure to carry out mediation, but also of the revocation of the injunction, pursuant to the judgment of the Court of Cassation’s Joint Chambers which established the relative burden to be borne by the opposing creditor.
It does not appear from the reading of the judgment that the creditor had asked to be remitted within the time limit in order to carry out the mediation procedure. Nevertheless, the Court of Appeal held that the change in case-law was relevant only for the purpose of compensating the costs of the proceedings.
The decision does not appear to be acceptable from this point of view since, in the absence of the remittance within the time limit, the opposing creditor, despite having relied on a different approach that legitimised him not to file the application for mediation, is forced to start new proceedings to apply for a new injunction. Moreover, the issue is made more complex by the fact that, unlike the cases decided by the Court of Naples and the Court of Salerno, the one decided by the Court of Appeal was at the appeal stage. In fact, if the creditor had remitted within the time limit and attempted mediation, the mediation condition would have been met on appeal, with the consequent admissibility of the case on the merits (which was declared inadmissible at first instance).
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