Lease and scheme of arrangement on a going concern basis
With a sentence dated April 5th, 2017 the Court of Appeal of Florence stated that the lease is incompatible with the scheme of arrangement made on a going concern basis. The sentence states that the entire discipline of the aforementioned scheme, ex art. 186bis of the Italian Bankruptcy Law, is based on the assumption that the debtor will continue his business activity.
The going concern, in fact, implies that business risks continues to fall on social creditors, affecting their likelihood of satisfaction. And this is the reason why the Law requires a professionist to express his opinion on the convenience for creditors to continue the business activity instead of the liquidation alternative. The case analyzed by the Court of Appeal, on the other hand, is different: the lease of the company had been put into effect before the submission of the scheme of arrangement proposal, in view of the subsequent sale.
This case cannot be considered as a scheme of arrangement made on a going concern basis, since the corporate risk falls exclusively on the renter while the creditors are destined to be satisfied with the rents and with the sale price. The indication of the Court of Appeal is in contrast with numerous other judjments of merit, which, on the contrary, believe that the use of the lease is a suitable instrument for the subsequent sale of a company.