NEGOTIATED SETTLEMENT: IN THE CONTEXT OF PROTECTIVE AND PRECAUTIONARY MEASURES, IS IT POSSIBLE TO REQUEST THAT A JUDICIAL MORTGAGE REGISTERED WITHIN THE PREVIOUS 90 DAYS BE DECLARED INEFFECTIVE?
The Court of Bergamo recently confirmed the protective measures requested by a company within the framework of a negotiated crisis settlement procedure, limiting, however, their duration and recipients on the basis of a convincing argumentation interesting both because it outlines the difference between the measures in question and the automatic stay under Article 168 of the Bankruptcy Law, and because it contributes to defining the perimeter of judicial deliberation for the purposes of the confirmation and adoption of protective and precautionary measures in the negotiated settlement.
By order of 24 February 2022, the Court of Bergamo, at the outcome of the hearing for the confirmation, revocation or amendment of the protective measures of the company’s assets previously requested by a company pursuant to Articles 6 and 7 of the new Decree-Law no. 118/2021 (converted into Law 147/2021), confirmed the protective measures, limiting their duration to approximately 55 days from the date of the order (instead of 120 days as requested by the company) and rejecting, among others, the request to obtain an injunction against all creditors, instead of those specifically identified and already issued with an injunction against the company.
The order is particularly interesting because, with it, the Court of Bergamo clearly delineates the perimeter of the measures that can be granted on the basis of Articles 6 and 7 of the new Decree-Law 118/2021 and provides useful indications on the content of the assessments that a Court must make when it is called upon to confirm, revoke or modify the protective and precautionary measures within the framework of a negotiated crisis settlement procedure.
It is useful to recall, preliminarily, that, pursuant to Article 6 of Decree No. 118 converted into Law No. 147, when an entrepreneur makes a request for protective measures in the context of the negotiated crisis settlement procedure, from the day of publication in the companies register “creditors may not acquire pre-emption rights unless agreed with the entrepreneur, nor may they initiate or continue executive and precautionary actions on his assets or on the assets and rights with which the business activity is carried out“. It is also worth mentioning that, pursuant to Article 7, on the same day of the publication of the above-mentioned petition, the entrepreneur shall apply to the competent court for confirmation or modification of the protective measures and, where necessary, for the adoption of the precautionary measures necessary ‘to complete the negotiations‘.
The Court, having fixed the hearing, hears the parties, the expert and, ‘if the protective measures or precautionary measures requested affect the rights of third parties‘, hears them as well.
The Court, in its order, “establishes the duration, not less than thirty and not more than one hundred and twenty days of the protective measures and, if necessary, of the precautionary measures ordered” (extendable up to a maximum of 240 days only “for the time necessary to ensure the successful outcome of the negotiations“).
Finally, for the purposes hereof, it should be noted that Article 7 introduces the institution of ‘selective’ measures: at the request of the entrepreneur and after consulting the expert, in fact, ‘the measures may be limited to certain initiatives taken by creditors to protect their rights or to certain creditors or categories of creditors‘.
In the case submitted to the attention of the Court of Bergamo, the petitioner had represented that it had been subjected to various initiatives by seven specifically identified creditors: all of them had obtained injunctions against the debtor company (some of which were provisionally enforceable) and one of them (an unsecured creditor) had registered a judicial mortgage on the company’s assets one month before the debtor’s precautionary appeal was filed.
Notwithstanding the specific identification of seven creditors, the applicant had generically requested the adoption of “all protective measures” until the conclusion of the negotiated settlement procedure and against “all creditors by title or cause prior to the filing of the petition“. In addition, he had requested to declare, again as a precautionary measure, the ineffectiveness of the judicial mortgage registered by a creditor, considering it a measure achievable in the negotiated settlement as it can be included among the protective and precautionary measures of Articles 6 and 7 of Decree-Law 118/2021.
The applicant’s assumption was that Article 168 of the Bankruptcy Law could be applied by analogy, which, as is well known, regulates the so-called “automatic stay” in the context of the composition agreement, i.e. the institution under which, from the publication of the petition for composition in the Companies’ Register and until the final approval of the composition agreement, prior creditors may not, under penalty of nullity, commence or continue enforcement and precautionary actions on the debtor’s assets or acquire pre-emption rights “unless authorised by the Judge” and “judicial mortgages registered in the 90 days preceding the date of publication of the petition in the Companies’ Register are ineffective with respect to creditors prior to the composition agreement“.
The Court of Bergamo nevertheless rejected the application for the declaration of the ineffectiveness of the judicial mortgage, stating that the applicant’s application fell outside the express perimeter of the measures that can be granted on the basis of Articles 6 and 7 of Decree-Law 118/2021 and that, in any event, the application would have entailed an assessment “not compatible with the merely interim deliberation” to which the Court was called.
Moreover, the Court of Bergamo, basing itself on the letter of Article 6 of Decree-Law 118/2021, ruled out the existence of the conditions for the invoked analogical application of Article 168 of the Bankruptcy Law (a gap in the legislation and an identity of cases), highlighting the difference between the two institutions (in one case there was already a bankruptcy procedure, albeit in a “reservation” key, and in the other – that of precautionary measures within the negotiated settlement – there was no bankruptcy procedure) and clarifying that the automatic stay effect of Article 168 of the Bankruptcy Law was and is obtainable through the application of the composition procedure pursuant to Article 161, paragraph 6, of the Bankruptcy Law, i.e. through a different and alternative initiative with respect to the access to the negotiated settlement.
Under a different profile, in agreement with a previous case law (Court of Rome, ord. 3.2.2022), the Court of Bergamo also rejected the request to grant “erga omnes” (i.e. all creditors) the measures under Articles 6 and 7 of Decree-Law No. 118/2021, since such measures were to be understood as achievable only “selectively“, i.e. exclusively against the creditors identified by the petitioner in its appeal.
As regards the perimeter of judicial deliberation for the purposes of confirming or revoking the measures requested and the adoption of protective measures in the context of the settlement, commentators have outlined two possible approaches: according to a first one, based on the private nature of the institution of the negotiated settlement, the Court’s assessment should be limited to the verification of the aptitude of the protective measures to abstractly pursue the function of protecting the negotiations and presiding over their successful outcome; according to a different one, the Court should assess the concrete possibility that, in the given situation, the measures serve the purpose of actually preserving the assets and favouring the negotiations (as well as the actual prejudice that the creditors might suffer from the application of the measures).
The Court of Bergamo seems to have adopted the second, more practical, approach.
In particular, it assessed the company’s situation by verifying whether, for the purposes of granting the measure, there was a prerequisite of a state of crisis or reversible insolvency (i.e. not insolvency tout court).
It also carefully examined all factual and judgmental elements attached by the debtor in support of the petition, including the business progress report, the financial plan and the expert’s statements, in order to draw the conclusion that the business continuity envisaged by the entrepreneur was based only on a financially deficient business and industrial reorganisation programme and that, as things stood, no negotiations with creditors appeared to have been actually undertaken, despite the entrepreneur’s declarations of intent and the expert’s comfort as to the prospective existence of ‘the prerequisites for negotiations with creditors‘.
All of these considerations led the Court to refuse to grant the maximum 120-day measure and to grant it for a shorter period (55 days from the date of the order, 80 days from the date of the petition), i.e., for the time deemed “presumably necessary to enter into concrete negotiations with the creditors, such as to ensure (if the outcome is favourable) the company’s recovery, together with the preparation not only of an industrial plan, but also a financial plan and any guarantee that would be capable of avoiding any greater prejudice to the creditors“.
s.rossi@macchi-gangemi.com
g.bonfante@macchi-gangemi.com
THE ITALIAN SUPREME COURT ON PROTECTABILITY OF REGISTERED ADVERTISING CLAIMS: THE ‘500%FIAT’ CASE.
By means of a recent decision (no. 8276 of March 14th, 2022) the Italian Supreme Court has set forth an important principle on the protectability of an advertising message (slogan) formally protected via registration, pursuant to Copyright law.
On February 9th, 2018, the Court of Appeal of Florence has upheld the first instance judgment which had rejected a claim brought by Mr. A.M. against FCA Italy S.p.A. (formerly Fiat Group Automobiles S.p.A.: “FCA”) concerning copyright infringement with respect to the registration of the slogan “500%Fiat” as an original work of art, subsequently claiming for damage compensation against the abusive conducts allegedly performed by FCA.
Mr. A.M. filed before the SIAE the slogan “500%Fiat” and FCA used this claim in its marketing and advertising activity. SIAE is an Italian society established for the collective management of authors’ rights.
The Court of Appeal held, in particular: a) the inseparability of the advertising slogan “500%Fiat” with the brand of the car and the producer and the subsequent lack of protectability of the claim per se; b) even assuming separability in the present case, the slogan would nonetheless be invalid as lacking creativity, due to the presence of previous similar advertising slogans (“500%Joy”; “500%Unconventional”; “La praticità al 106 percento”) as well as originality, given that the claim would lack creativity as compared to former advertisement slogans used for different car models.
A.M. appealed the decision on the ground claiming, inter alia, that the “separability” criterion had been expressly ruled out in Article 4 of the Italian Copyright law, in light of Legislative Decree no. 95/2001.
The Supreme Court confirmed the line of argument delivered by the Appeal Court on the inseparability of the slogan from the company name “Fiat” and its car model “500”. In addition, the Supreme Court outlined that, in cases where the slogan makes direct reference to particularly well-known brands which are widely spread among the public, it is evident that what is really sought after by the advertiser is the “knock-on” effect which is linked to the marketing of products bearing that mark.
Consequently, the need for the claim to be assessed in its complexity can certainly lead the judge to conclude in the sense of the inseparability of the claim given that, without the “knock-on” provided by the well-known element, the advertising message would bear no evocative effects in the mind of the consumer.
The above being said, the Supreme Court concluded that the Appeal court correctly found that the well-known “Fiat” brand name was inseparably linked to the other element of the slogan (500%), thus triggering the concept of a notorious car model produced by the Italian manufacturer. In other words, it was precisely because of the above-mentioned combination that the advertising claim as such could be conceived as carrying a powerful message within the vast majority of the general public, allowing to conclude that:
“In the field of copyright, the claim, pursuant to Article 2(4) of Law No. 633 of 1941 (the Copyright Law), of exclusive rights over the registration of an advertising message (slogan) requires evidence of the originality criterion, which is to be excluded in the event of direct reference, within such message, to formerly well-known registered trademarks bearing a strong evocative power, so that the link provided by the latter renders the creative part of the slogan null and void and excludes the innovative element“.
m.baccarelli@macchi-gangemi.com
m.lonero@macchi-gangemi.com
ONLINE INCORPORATION OF LIMITED LIABILITY COMPANIES: TECHNOLOGIES AND NEW OPPORTUNITIES.
Legislative Decree No. 183/2021, which implemented EU Directive 2019/1151, introduced significant innovations in the field of corporate law aimed at simplifying certain procedures. One of the most important areas of intervention regards the possibility to incorporate limited liability companies (società a responsabilità limitata – S.r.l.) and simplified limited liability companies (società a responsabilità limitata semplificate – S.r.l.s.) merely online and remotely (before the issue of the above Legislative Decree the physical attendance of the parties, or their attorneys, was requested by law).
In particular, thanks to the innovations introduced by Legislative Decree No. 183/2021, it is now possible to set up the aforementioned companies entirely remotely, i.e., with the participation of all parties involved through a videoconference system.
For this purpose, the platform managed by the National Council of Notaries has been identified as the system capable of guaranteeing compliance with the main notarial functions during the stipulation, such as (i) ascertain the identities of the parties, (ii) verify their wills, and (iii) keep track of the activities performed during the stipulation, including the execution.
For sake of prudence, during the incorporation videoconference, the notary may interrupt the online stipulation and require the parties to attend in person if the notary doubts of the identity of any of the parties or deems that the rules on the capacity to act or represent a company have not been complied with.
Should this method of incorporation of S.r.l. or S.r.l.s. be adopted, the deed of incorporation – in the form of an electronic public deed – shall be signed by the parties by means of an electronic signature. In this regard, the notary will be authorized to issue, to those parties which do not have one, an electronic signature simultaneously with the stipulation.
The following two further requirements shall be met in case of remote incorporation of the two aforementioned types of companies:
– the notary must be established in the same district of the Court of Appeal in which at least one of the shareholders resides:
– the contributions at incorporation (of at least 25% of the capital) shall be made exclusively in cash. This contribution, in particular, shall be made by means of a bank transfer to a bank account made available by the notary himself/herself pursuant to Article 1, par. 63 of the 2014 Stability Law.
Once the deed of incorporation has been stipulated, the notary shall then proceed with the filing of the newly formed company with the Register of Enterprises by sending a digital copy of said deed of incorporation (and its annexes) electronically within 10 days of the stipulation, as per Article 2330 of the Italian Civil Code.
p.orzalesi@macchi-gangemi.com
a.frau@macchi-gangemi.com
g.magistrali@macchi-gangemi.com
PRIVACY AUTHORITY SANCTIONS TWO COMPANIES OF THE UBER GROUP FOR MORE THAN EUR 4 MILLION.
The Italian Privacy Authority has sanctioned two companies of the Uber Group for around EUR 2 million each. The main violations found were unsuitable disclosures, the processing of data without proper consent, and the failure to notify a data breach.
After a long and complex investigation started in 2019, the data protection authority (‘Garante’) issued an injunction order against Uber B.V., headquartered in the Netherlands, and Uber Technologies, headquartered in San Francisco, USA. A fine of EUR 2 million and EUR 120,000 was issued for each of the two companies.
The two subjects were found guilty of GDPR violations against 1.5 million users resident in Italy, passengers and drivers.
During inspections carried out at the headquarters of Uber Italy (the Italian subsidiary) following a data breach made public by the parent company in 2017, the Garante identified three main critical areas:
– inadequate notice
– processing of data without consent
– failure to notify the Garante for the use of geolocation data.
The cyber accident (which occurred before the GDPR came into force) involved more than 57 million global users, and privacy authorities in the Netherlands and the UK had issued sanctions under national law.
The data subject involved in the data breach were mainly personal contact (name/surname, address, telephone and e-mail), as well as smartphone app login credentials. In addition to these, there was data relating to relationships with other users (friends, profiling, etc.) and, above all, geolocation data.
After having conducted the investigation, the Garante sanctioned both companies, co-processors and each responsible for violations committed against users resident in Italy under both the Privacy code and the GDPR.
In particular, it has been noted that the notices provided upon signing up of the service did not mention the names of the co-processors, as they were generic and approximate as well as ‘unclear and incomplete’, in short, they could not be easily understandable.
Examination of the notices also revealed that the purposes of the processing were not well specified, and that the data subject’s rights were described vaguely and without any indication as to which data were necessary or not for the purposes of activating the service. In addition, it emerged that the data of almost 1.5 million users were processed for the purposes of ‘fraud risk’ profiling, which assigned each person a profile (‘low’, ‘medium’) and a parameter from 1 to 100.
Finally, given that the facts concern a period before GDPR, the companies were charged with failure to notify geolocation processing, a compulsory requirement under the previous legislation.
Evaluating the various violations, the number of subjects involved, and the mitigations put in place by the companies, the Garante applied a penalty of around EUR 4.3 million in total.
This measure is part of a long series by the Authority that increasingly highlights the need, both for structured groups and smaller companies, to pay attention to their privacy system, ensuring its compliance and, above all, constant updating.
r.demarco@macchi-gangemi.com
f.montanari@macchi-gangemi.com
TAXATION OF SEVERANCE PAY (T.F.R.): SHOULD THE TAX ADMINISTRATION APPLY THE SEVERABILITY CLAUSE?
With regard to the recalculation of the tax due on severance pay liquidated by the employer, the Tax Administration is also required to consider the so-called “severability clause” set forth in Article 1, paragraph 9 of Law No. 296/2006 (2006 Finance Act), which provides that “For the purposes of determining the personal income tax due on severance pay … the rates and income brackets in force at December 31, 2006 shall be applied, if more favorable.”
The judges of the Lombardy Regional Tax Commission recently affirmed this in Judgment No. 1114 of March 23, 2022, which annulled a notice of assessment by which the tax authorities had recalculated the tax due by the taxpayer for Personal Income Tax (IRPEF) purposes on the amounts received upon termination of employment without taking into account the severability clause.
In fact, the enforceability of the severability clause to severance pay accrued up to December 31, 2000, would not be the modus operandi of the Office, which, liquidating the final IRPEF, proceeds to calculate the amount of the tax considering the average ordinary taxation of the last five years as provided for by Article 19 of the Income Consolidated Tax (Presidential Decree No. 917/1986 – “TUIR”). In fact, the Revenue Office believes that the severability clause is only applicable to severance pay accrued up to December 31, 2000, as the 2013 Stability Law revised the tax brackets and tax rates and abrogated the provision establishing the severability clause.
The Judges of the Milan Court rejected the arguments of the Revenue Office and clarified instead that, for the purposes of determining the personal income tax due on severance pay, there is no temporal limitation on the application of the severability clause to the quota of severance pay accrued as of December 31, 2000, with respect to the clear and explicit wording of Article 1, paragraph 9, of Law No. 296 of December 27, 2006. The 2013 Stability Law, moreover, did not abrogate the provision at stake, since the article of the proposed legislation providing for such abrogation in the course of Parliamentary work was not approved.
Moreover, it shall be noted that the aforementioned paragraph 9 of Article 1 of Law 296/2006 does not specify whether the application of the more favorable taxation regime in force as of December 31, 2006 has to be carried out only by the withholding agent or also by the Revenue Office when recalculating. In the absence of any legislative provision, it can be assumed that the Revenue Office is also required to apply the severability clause to the severance pay. To be considered that he same Office, by Circular Letter No. 13/2007, had clarified that “The tax administration in checking and re-assessing the tax, once more proceeds to verify the most favorable taxation….”.
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It is worth mentioning, however, that as of January 1, 2022 with the approval of Budget Law 234/2021, which amended in melius the income brackets and related rates, the tax policy is likely to be more favorable to the taxpayer and consequently the severability clause should not be applied. We wonder whether the Revenue Office is now starting to apply the severability clause instead! As usual…eyes open!!!! [stay tuned!!!]
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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