Excess value and external resources in the preventive agreement

The ruling under examination originates from a proposal for a preventive agreement filed before the Court of Mantova, rejected due to (i) the critical issues found in the calculation of the liquidation value pursuant to art. 87, paragraph 1, letter c) CCII and, consequently, the value exceeding the liquidation value, (ii) the incorrect qualification of external resources as value exceeding the liquidation value and (iii) the absence of the condition referred to in art. 112, paragraph 2, letter d), no. 2 CCII required for the approval of the proposal.

The proposal for the agreement had mixed content: partly liquidatory and partly in indirect business continuity, given the sale of the company, through a competitive procedure, to a third party during the proceedings. An external financial contribution of €200,000.00 from the purchaser of the company was also foreseen.

Given the failure to reach the majority required by art. 109 paragraph 5 CCII for the approval of the proposal, the applicant had requested forced approval (so-called cross-class cram down) arguing the existence of the conditions referred to in art. 112 paragraph 2 CCII3.

In particular, the applicant asserted that the condition referred to in art. 112, paragraph 2 letter d), no. 2 CCII had been met, according to which, for the purposes of forced approval of the proposal, it is also necessary that at least one class of creditors is satisfied in whole or in part by applying the order of legitimate causes of preference both on the liquidation value and on the value exceeding the liquidation value.

The applicant argued that the condition referred to in the aforementioned norm was met because, applying the required distribution criterion of the value, four classes were partially satisfied. With the necessary clarification that, for the purposes of the calculation, the value exceeding was entirely constituted by the external financial contribution from the purchaser.

On this point, both the Court of Mantua and the Court of Appeal of Brescia, appealed in the context of the complaint pursuant to art. 51 CCII by the applicant, argued the non-existence of the condition referred to in art. 112, paragraph 2 letter d), no. 2 CCII, noting firstly the critical issues in the use of the calculation criterion of the liquidation value. The applicant, in fact, had limited itself to estimating the real estate and movable assets, omitting to apply the criteria provided by the CCII for the evaluation of assets in judicial liquidation (e.g., the discount rate to be applied to the competitive sale, the liquidation of the assets at the end of a provisional exercise).

Secondly, the judging bodies noted the different rule for the distribution of the agreement's assets provided by the CCII for the value exceeding and for external resources. Specifically, while the distribution of the value exceeding is subject to the rule referred to in art. 84, paragraph 6, CCII, by express provision of the last period of the cited norm, the distribution of external resources derogates from any rule.

Therefore, the impossibility of distributing external resources by applying the Relative Priority Rule (RPR) does not allow the condition referred to in art. 112 paragraph 2 letter d), no. 2, CCII to be met.

On these grounds, the Court of Appeal of Brescia rejected the complaint filed by the applicant against the sentence issued by the Court of Mantova in the context of the approval procedure of the preventive agreement.