The conflict of interests among creditors in the composition with creditors and in bankruptcy agreements

There has always been discussion about the conflict of interests among creditors in the composition proceedings. Bankruptcy Law does not regulate nor typify the institution at issue, whereas it is regulated as regards companies.

The recent reform of the Bankruptcy Law in June 2015, introduced some changes in the composition with creditors proceedings, such as the possibility for creditors to make their own counter-proposal against the debtor’s one. There is, however, a difference between composition with creditors and bankruptcy agreements: in the first case, the reform provides some specific countermeasures aimed at neutralizing any possible adverse effects resulting from the conflict of interests; such measures have not been introduced for bankruptcy agreements, with a consequent  striking asymmetry between the two institutions.

The case of the creditors’ counter proposal is emblematic:  they can advance and accept their  own proposal, without being  expressly excluded from the vote concerning the proposal of composition;  therefore they can influence the approval procedure of the agreement, even if  the interest in satisfying their own credit might collide with that of other creditors.

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