Subjective limits to the content of protective measures in the negotiated settlement

The Court of North Naples, in an order issued as part of the proceedings for the confirmation of protective measures in the negotiated crisis settlement, addressed the issue of the subjective limitation of said measures established by Article 18 CCII.

Following the recourse filed by the debtor pursuant to Article 18, para. 1, CCII, two creditors filed statements of constitution requesting, respectively: i) the revocation of the protective measures and, in the alternative, the narrowing of their scope, with the exclusion, from the protective perimeter, of the properties already subject to enforcement proceedings pending before the same Court and ii) the rejection of the motion for confirmation of the protective measures for unjust and excessive compression of creditors' reasons resulting from the same.

The Appointed Expert expressed a favorable opinion in relation to the debtor's request for confirmation of the protective measures, the latter being functional to ensure the successful outcome of the negotiations and taking into account that the latter could have been jeopardized by the possible continuation of the pending real estate enforcement proceedings.

As for the petition for restriction of the scope of protective measures made by the creditor - proceeding in the individual execution -, the Court held that it did not accept the said petition since the continuation of the individual execution would have hindered the chances of success of the negotiations and the success of the reorganization plan, the latter consisting of the provision of income for the real estate owned by third parties (guarantors), in addition to the contribution of external finance.

On the subject, on the other hand, of subjective limits to the content of protective measures, the court noted that Article 18 CCII is aimed only at the protection of the entrepreneur's assets and the property with which the business activity is carried out. Therefore, assets owned by third parties (guarantors) are excluded from the perimeter of applicability of the protective measures, unless the same are functional to the exercise of the business activity, pursuing the ratio legis of preserving the business values and their profitability in the market.

In the present case, the proceeds of real estate owned by third parties were found to be functional only for the execution and better success of the plan and not, on the other hand, for the operation of the business.

Finally, the court noted that the proponent's request, consisting of the (only) proposal to allocate the proceeds of the guarantors' real estate to the rehabilitation of the enterprise in order to ensure the feasibility of the plan, was outside the subjective scope established by Article 18 CCII, in addition to the fact that the guarantors' real estate was not subject to real estate enforcement proceedings.

On these grounds, the Court of North Naples upheld the protective measures on the assets of the plaintiff's estate for the term of one hundred and twenty days.