Judicial Reports pursuant to Bankruptcy Law
We want to analyze, below, the activity of the commissioners, in particular with regard to the duties of drafting and filing reports pursuant to art. 172 LF.
The commissioners, if necessary assisting, for the evaluation of the assets, by an appraiser appointed by the Delegated Judge, draws up the inventory of the debtor’s assets “and a detailed report on the causes of the failure, on the conduct of the debtor, on the proposals of arrangement and on the guarantees offered to creditors, and deposits it in the registry at least forty-five days before the creditors’ meeting, communicating it to them by certified electronic mail” (art. 172, co. 1, first LF proposition) and to the public prosecutor (art 161, paragraph 5, LF);”In the report the commissioner must illustrate the utilities that, in the event of bankruptcy, may be brought by the actions for damages, recovery or revocation that could be promoted towards third parties” (art. 172, co. 1, second LF clause).
Wwho will be able to acquire adequate elements
The report will be illustrated by the Commissioner in the meeting of creditors, chaired by the Delegated Judge – who will be able to acquire adequate elements of assessment regarding the existence or otherwise of the conditions for the continuation of the composition with creditors – and where each creditor admitted to the vote may, knowingly and appropriately informed, exercise their voting Othello, explain the reasons for which they may not consider the proposed arrangement to be admissible and acceptable, and raise any disputes over concurrent claims, except the Othello of the debtor to dispute the claims claimed, as well as the duty to provide to the Judge all the necessary clarifications.
The report in question may be decisive for creditors, for their expression to vote, on the”feasibility” of the plan proposed by the debtor and the convenience of the agreement, also in relation to the”utility” that may be made, in a any bankruptcy, from the exercise of the actions pursuant to art. 172, co. 1, second sentence. The”illustration” of these”utilities” constitutes a complex task for the Commissioner, as it must be carried out in a fairly short time (65 days maximum) – lower than those granted to the bankruptcy trustee (no more than 180 days from the declaration of bankruptcy ) to prepare the liquidation program (in which also indicate”the actions for compensation, recovery or revocation to be exercised and their possible outcome” : Article 104 ter, paragraph 2, letter c) of the Financial Code, without the support of similar powers of administration and disposition of the debtor’s assets, which in the procedure in question continues to be its owner.
Specifying that the detailed report on the”conduct of the debtor”, in the past functional above all to the judgment of merit given by the Court during the homologation, becomes relevant particularly to the appraisal of convenience of the creditors and to the ascertainment of eventual profiles of revocation of the arrangement art. 173 LF, it is added that the Commissioner can also be asked to prepare supplementary reports.
In fact, if not later than thirty days before the meeting of creditors (but presumably after the filing of that report) “competing proposals are filed, the commissioners reports on them with a supplementary report to be filed with the registry and communicated to the creditors, with the procedures referred to in article 171, co. 2, at least ten days before the creditors’ meeting” (art. 172, par. 2, first LF proposal). Leaving aside any observation regarding the absence of regulatory provisions relating to the communication of such a supplementary report to the debtor, it should be noted that these are short-term (twenty days), especially since the supplementary report must contain,”as a rule [therefore not necessarily], a detailed comparison of all the filed proposals” (art. 172, co. 2, second proposition), which could well be inhomogeneous with respect to that of the debtor for content, purpose, guarantees, etc.
Furthermore, in view of the legislative provision which provides that the proposals, presented by anyone, can be modified “ up to fifteen days before the meeting of creditors” (art. 172, co. 2, third proposition) and art. 161, co. 3, LF according to which”in the case of substantial modifications of the proposal or of the plan” the debtor must present a new report of the qualified and independent professional, which is”analogous” to the report already filed for the purposes of admission to the arrangement (therefore with illustration of the”utility” to be guaranteed to each creditor), the commissioners will in these cases only have five days to prepare and file his”supplementary” report (within ten days before the meeting).
A similar supplementary report is drawn up (and evidently communicated both to the public prosecutor and to the creditors) also”if information emerges which the creditors must be aware of for the purpose of expressing the vote” (Article 172, paragraph 2, fourth clause); it is not clear that the deadline for filing at least ten days before the creditors’ meeting is also valid for such a report, taking into account the fact that, on that occasion, the commissioners must nonetheless illustrate “ his report and the final proposals of the debtor and those that may be presented by creditors pursuant to Article 163, fourth paragraph” (art. 175, co. 1, LF), providing any further relevant information in his possession.
It should be added that the possible relevance of the differences found with respect to the debtor’s proposal can determine the Commissioner to conclude his analysis with the preparation of his own composition with creditors, to be submitted to creditors as a possible alternative outcome of the procedure.
It seems appropriate to make observations on the nature of the deadline for filing the reports of the commissioners. In mind of the art. 152, co. 2, Code of Civil Procedure, the procedural terms explicitly declared as such by the legislator are mandatory. The peremptory nature of a term must be expressly provided for by law, or, as stated peacefully by doctrine and jurisprudence, can be deduced from the purpose and function that the term fulfills. In the de quo case the doctrine is unanimous in considering the order as a term, with the consequence that if the late deposit does not allow the creditor full knowledge of the report, he may request a postponement of the meeting, which if not accepted legitimizes the re-proposal of the question also in homologation.
At this point, we want to synthetically describe the activities that the commissioners puts in place for the purpose of drafting the report pursuant to art. 172. The Commissioner: examines the financial statements of previous years to identify the main causes of the state of crisis that led to the debtor filing the proposed arrangement with creditors, the time of their occurrence and the actual impact on the state of insolvency of the company; verifies the possible existence of profiles of responsibility attributable to the members of the corporate bodies and the eventual completion of operations potentially subject to compensation, recovery and revocation actions in the event of bankruptcy; ascertains the feasibility of the arrangement plan within the terms proposed by the debtor and highlights the risk and critical factors, based on the documentation filed by the debtor and any other information acquired.
Finally, given the indispensability of having a reliable asset, the Commissioner: verifies the correspondence of the balances communicated by the creditors with what is shown in the list deposited by the debtor or by the accounting records; performs an analysis on the solvency of the debtors, both on the basis of the historical payment trend resulting from the accounting entries, and with the possible changes or other channels suitable for obtaining information on the matter; acquires a report from the debtor’s lawyer on the status of pending lawsuits; make any necessary adjustments to the data shown in the plan by the debtor adjusting the assets and liabilities to those arising from the activities described above, as well as the values of the inventory referred to in art.