This is the updated text, with the addition of the footnotes of the presentation given at The City Law School – City University of London on April 6^th 2017, during The Inaugural Cross-Border Corporate Insolvency and Commercial Law [CI&CL] Research Group Conference & Simposium 2017 dedicated to the Treatment of Executory Contracts in Insolvency Law: a Comparative Study. The article is intended also to be published – with possible changes and additions – in J. CHUAH-E. VACCARI (edited by), Treatment of Executory Contracts in Insolvency Law: a Comparative Study, London, 2019. The book represents the first example of a collaborative work supported by the cross-border Corporate Insolvency & Commercial Law [CI&CL] Research Group, a non-profit network of scholars, profession­nals, and industry insiders with research interests in Cross-Border Corporate Insolvency Law and Com­mercial Law (www.ciclresearch.com).

L’articolo si propone di fornire al lettore, anche straniero, l’esame della disciplina dei degli executory contracts (dei “contratti pendenti”) nel fallimento e nel concordato preventivo – sia liquidatorio sia in continuità – mettendo in evidenza i diversi obiettivi delle varie discipline che vengono esaminate. Con riferimento al fallimento, oltre alla regola generale (di cui all’art. 72 L. Fall.), vengono esaminate anche le principali disposizioni relative ai singoli contratti. All’esame della disciplina attuale si affianca quello della possibile evoluzione della materia a seguito dell’approvazione della Delega al Governo per la riforma delle discipline della crisi di impresa e dell’insolvenza (c.d. “Riforma Rordorf”) ovvero della L. 19 ottobre 2017, n. 155.

SOMMARIO:

1. Introduction - 2. General treatment of executory contracts in the Bankruptcy procedure - 3. The most significant specific contracts - 3.1. Real estate to be built - 3.2. Finance lease - 3.3. Sale with retention of title - 3.4. Contracts with continuous or periodic performance - 3.5. Business lease agreements - 3.6. Property lease agreements - 3.7. Procurement contract - 3.8. Insurance contract - 3.9. Stock market forward contract - 4. The executory contracts in the Arrangements with Creditors - 5. The executory contracts in the Arrangements with Creditors on a Going Concern Basis - 6. The global "Rordorf Reform" - 6.1. The general principles - 6.2. The crisis of groups of companies - 6.3. The Judicial Winding-Up procedure - 6.4. The reform of the Arrangements with Creditors - 7. Conclusion - NOTE

1. Introduction

The current Italian Insolvency Law, as amended by the decree March 14th 2005, n. 35 [1], the legislative decree January 9th 2006, n. 5, and the legislative decree September 12th 2007, n. 169, contains significant elements of discontinuity compared to the former Bankruptcy Law of 1942 [2]. This discontinuity will be even more marked if the government will implement the guidelines included in the recently enacted Law known as “Rordorf Reform” [3], as this article explains in §§ 6 ff. [4]. Starting in 2005 the old provisions were profoundly altered to favour the restructuring of distressed but viable entities. In particular, the new rules dramatically improved the procedure known as Arrangements with Creditors, whose structure is loosely based on the U.S. Chapter 11. Further it is worth mentioning the introduction of the Arrangements with Creditors with Business Continuity [5] in 2012 [6], alongside with new rules according to which the debtor can file a petition for an arrangement (so called “in white” or “incomplete” petition) reserving the right to lodge the proposal and the plan at a later stage [7]. The statutory favour towards the use of Arrangements with Creditors ended abruptly in 2015, following some concerns on the abusive use of these mechanisms. That year marked the introduction of new eligibility requirements for the admission to Arrangements with Creditors based on Liquidation. Nowadays it is necessary that the debtor ensures the payment of 20% of the unsecured debts to be admitted to the procedure, while creditors have been gi­ven the right to submit rival proposals and rival bids [8]. At the time of writing, ailing companies have the opportunity to choose among a wide variety of procedures to liquidate or turn around their business. These include: Out of Court Compositions with Creditors, Attested Plans for Re­structuring [9], Agreements for the Restructuring of Debts [10], Agreements for Restructuring of Debts Involving Financial Entities [11], Agreements with Tax Authorities (Tax Settlements) [12], Arrangements with Creditors [13], Extraordinary Administrations for large Undertakings in State of Insolvency [14], Bankruptcy [15] and Enforced Judicial Liquidations [16]. Some of these procedures can be considered Formal Insolvency Procedures, according to the [continua ..]

2. General treatment of executory contracts in the Bankruptcy procedure

In the discipline of the Bankruptcy procedure, the principal rule that deals with pre-existing legal relationships is art. 72 b. law [20]. There are also some specific rules on single contracts: these include, among others, rules on real estate contracts in which the construction is yet to be built or completed [21] or sales with retention of title clauses [22]. In addition, outside of the Bankruptcy Law, specific contracts are also subject to specific rules. The general rule is that, upon filing, the enforceability of executory contracts is suspended and the Law gives the administrator the power to assume or reject them. Indeed, the general rule states that, when one of the parties is declared bankrupt, if a contract is still not performed or not entirely performed by both parties, the performance of the contract remains suspended. The contract remains suspended until the administrator, with the authorization of the committee of inspection, declares that he/she is succeeding to the contract on behalf of the bankrupt entity. Only if the administrator declares that he/she is succeeding into the contract, the preliminary authorization of the committee of inspection is required. Only in this last case the Bankruptcy procedure assumes all the relevant obligations. The administrator is, on the other hand, free to decide to reject the contract; in this case the authorization of the committee of inspection is not necessary. The decision of the administrator is not subject to any time limits. However – as a counterweight – the other contracting party (the in bonis party) may bring an action against the administrator, obliging the bankruptcy judge to set a deadline, of not more than sixty days, for the administrator to reach a final decision. If the deadline expires with no reply from the administrator, the contract is considered to be dissolved. Regarding this general rule we can observe that: a) the Law attributes to only one of the parties of the contract (i.e., the Bankruptcy entity), the discretionary power to dissolve it; b) the other party is penalised; c) the reason for this discipline – which clearly favours the Bankruptcy estate – can be found in the need to preserve and promote the collective interest of creditors; d) the choice of the administrator must be determined after having consideredthe interests of the creditors as a whole. This discipline reflects the [continua ..]

3. The most significant specific contracts

Under Italian Law there are particular rules for specific pre-existing legal relationships/contracts. The most significant rules concern real estate to be build, finance lease, sale with retention of title, contracts with continuous periodic performance, bu­siness lease agreements, property lease agreements, procurement contract, insurance contract and stock market forward contract.

3.1. Real estate to be built

There is a specific discipline for this kind of contract [24], to be more precise for the contract whose objective is the future transfer of the ownership of a building not yet fully completed. This discipline is not applicable, however, in the case of a build­ing already completed. Regarding this contract the Law provides that the decision on the dissolution or the continuation of the contract is not (only) given to the administrator, but to both parties. The decision of any of them binds the other. According to art. 72 bis b. law, after the declaration of bankruptcy, this type of contract is also dissolved if the purchaser, a natural person, has claimed back from the guarantor for the sum paid to the constructor, and has accordingly informed the ad­ministrator. Obviously, this must happen before the administrator announces his/her decision to perform or reject the contract. The case-law underlined the peculiarity of the above mentioned discipline with respect to art. 72 b. law by affirming that art. 72 bis b. law provides a special legal framework for executory contracts regarding real estate to be built which grants to the promisee buyer particular instruments of protection, such as the constructor’s guarantee [25]. Therefore this discipline is special and it waives the one set out in art. 72 b. law [26]. The Law is clearly intended to protect the buyers of the building to be build, in order to avoid the risk that, during the period between the conclusion of the contract and the purchase of the property, the bankruptcy of the seller might prevent the purchase and at the same time cause the buyer to lose the funds already paid as a deposit. For this reason the buyer is not forced to respect or wait for the decision of the administrator. On the contrary, the buyer can anticipate the decision of the admini­strator by executing the guarantee that covers the amount deposited when the parties signed the contract. This can be done by a written communication to the admi­nistrator, thus obtaining the dissolution of the contract by the initiative of the buyer.

3.2. Finance lease

Under Italian Law, the finance lease is a contractual form that features manifold variations of structure and content. Its discipline is included in art. 72 quarter b. law. This type of contract had – and still has – enjoyed a significant success in the market. Similarly to the Anglo-Saxon experience, this contract is autonomously re­gulated by the Law [27], and it is primarily used in financial transactions. In the event of the bankruptcy of the user/lessee, the general rule [28] is applicable to finance lease agreements with the following further specifications. If, within the bankruptcy proceeding of the user, the provisional trading is allo­wed by the court [29], the agreement continues to be performed unless the administrator declares his/her intention to dissolve it. In the event of the dissolution of the agreement, the grantor/lessor has the right to obtain the asset, and he/she is obliged to pay to the bankruptcy administrator the difference (if any) between the price obtained by the sale of the asset and the resi­dual capital credit. The grantor/lessor has the right to be included in the list of bankruptcy creditors [30] if the price of the sale does not cover the entire amount of the credit claimed at the date of the bankruptcy order. On the contrary, in the event of the bankruptcy of the lessor, the agreement remains valid and enforceable. The lessee maintains the right to purchase the assetsafter the expiry of the agreement, subject to the payment of lease rentals and the previously agreed price.

3.3. Sale with retention of title

This is a contract expressly disciplined by the Italian civil code [31] characterized by the fact that the ownership of the asset remains with the vendor, while the possession of the asset is immediately transferred to the purchaser, even if the payment oc­curs by instalments. According to art. 73, § 2, b. law the bankruptcy of the vendor does not constitute grounds for the dissolution of the contract. According to the case-law the peculiar discipline provided by the art. 73 § 2 b. law, is justified by the fact that in this contract the effect of the transfer of the pro­perty, although it is postponed and subject to the full payment of the price, is alrea­dy binding between the parties, and therefore the seller is obliged to deliver the goods, and from that moment, pursuant to art. 1523 civil code, the buyer bears the risks in case the good perishes [32]. Otherwise, according to art. 73, § 1, b. law in the event of the bankruptcy of the purchaser, if the price is to be paid at a future time or in instalments, the administrator may succeed to the contract with the authorization of the committee of inspection. In this case, the vendor may request a deposit/guarantee if the administrator does not immediately pay the price with a discount at the legal interest rate. If the administrator withdraws from the contract, the vendor must return the instalments already paid, subject to the right to fair payment for the use of the item.

3.4. Contracts with continuous or periodic performance

Contracts with continuous or periodic performance guarantee, in the modern eco­nomy, the continuity of the supply of raw materials, commodities, energy and services between the parties at an agreed price. With regard to this type of contracts, the case-law has specified that every single delivery or supply of the performances satisfies an autonomous interest of the creditor, so with reference to the same contract with continuous or periodic performance, it is not identifiable a single performance but a plurality of performances, even if the plurality of the performances is related to the same contract which is the source of the obligation [33]. According to art. 74 b. law on so called “rolling contract”, if the administrator suc­ceeds in a contract of this type, he/she is obliged to pay in full the price of the deli­veries already made or the services already performed after the opening of the formal insolvency procedure. The case-law specified that the choice of the administrator to succeed in the contract does not necessarily require the written form, but it may be tacit and presumed by conclusive facts, as long as those facts are unequivocal [34]. The rule only regulates the case in which the administrator of the Bankruptcy estate is the beneficiary of the supply or the service, and he/she decides to succeed in the contract. In any other case, the general treatment of executory contracts (described in § 2) applies.

3.5. Business lease agreements

After the bankruptcy order against any of the parties of the business lease agree­ment [35], the general rule is that the contract continues to produce its effect among the parties [36]. In other words, bankruptcy does not represent a reason to dissolve these contracts, but both parties may withdraw within sixty days by paying a fair indemnityto the counterparty. In the case of disagreement between the parties concerning the amount of the indemnity, this is determined by the bankruptcy judge after hearing the arguments of the parties involved. The compensation/indemnity due to the administrator has a preferential right and is governed by art. 111 b. law.

3.6. Property lease agreements

The discipline is different in the event of the bankruptcy of the lessor or the lessee. In the first case [37], the bankruptcy of the lessor does not cause the dissolution of the propriety lease and the administrator succeeds in the contract. If the agreement is set to expire after more than four years from the bankruptcy order, the administrator has the power to withdraw from the agreement within one year of the bankruptcy order. The withdrawal produces effect only after four years from the bankruptcy order. The administrator has to pay to the lessee a fair indemnity for the early with­draw [38]. In the second case [39], i.e. the bankruptcy of the lessee, the administrator may with­draw from the agreement at any time, by paying the lessor a fair compensation for advance withdrawal; in this last case obviously the indemnity has a preferential right [40]. In the event of disagreement between the parties regarding the amount of the indemnity, this is determined by the bankruptcy judge after hearing the arguments of the parties involved.

3.7. Procurement contract

The rules on the private procurement contract differ depending on the characte­risation of these contracts. Special rules apply if the subjective qualities of the contractor had been the determining reasons for the contract (intuitus personae). When the personal qualities of the parties are not crucial [41], the administrator (of the insolvent party) has the right to terminate the contract or to assume it. In the latter case, he/she needs the authorisation of the committee of inspection. The procure­ment contract is automatically terminated if the administrator does not inform the other party within sixty days from the opening of the procedure that he/she wants to assume the contracts, and if he/she does not offer proper guarantees on the future performance to the performing party. In the other case [42], the bankruptcy of the contractor dissolves the contractual relationship only if the subjective quality of the contractor was the determining grounds for the contract, unless the other party agrees to continue the relationship [43].

3.8. Insurance contract

In this case, the rules [44] are as follows: a) unless agreed otherwise, the bankruptcy of the insured party does not dissol­ve the insurance contract covering damages; except in the case of a considerable ag­gravated risk which arises as an effect of the bankruptcy order; b) if the insurance contract continues, the insurer’s claim for unpaid premiums must be fully satisfied, even if the due date of the premium is before the bankruptcy order. This discipline is an exception to the general rule in order to ensure that the assets of the bankrupt entity remains fully insured during the development of the procedure [45]. In application of these principles, waiving the general rule (art. 72 b. law), the case-law affirmed that in the case of bankruptcy of the insured, the insurance contract continues ope legis, and the administrator replaces the insured and assumes all the obligations [46].

3.9. Stock market forward contract

For this kind of contract there is a specific discipline that aims to eliminate from the assets of the Bankruptcy procedure any risk linked to the price fluctuation; indeed it is believed that this risk is incompatible with the goal of the Bankruptcy that in Italian Law is the liquidation. According to the Law [47] if the term expires after the bankruptcy order of one of the contracting parties, the stock market forward contract is dissolved on the date of the bankruptcy order. The difference between the contractual price and the value of the items or the se­curities at the date of the bankruptcy order is paid to the Bankruptcy proceeding, if the bankrupt claims a credit; or, in the opposite case, the difference is included in the list of approved claims. For the reasons indicated above the case-law fosters the application of art. 76 b. law to the largest possible number of stock market contracts [48], as for example the swap contract [49], the domestic currency swap [50], the option on futures contracts and the option on currency [51].

4. The executory contracts in the Arrangements with Creditors

The Arrangements with Creditors is a very important proceeding; as mentioned before, the goals of the Arrangement with Creditors – a satisfactory and preservation procedure – can be either the restructuring or the liquidation of the company or its business; and these two objectives/goals can be pursued within the same procedure. During this procedure – unlike what happens in the Bankruptcy – the debtor remains in possession of his/her assets and continues the activity of the enterprise under the control of the court–appointed receiver. The goals pursued by the Law are in this case carried out without depriving the debtor of the management of his/her assets and the management of the enterprise [52]. In the discipline of the Arrangement with Creditors the principal rule which re­gulates the effects on executory contracts is art. 169 bis b. law [53]. According to the Law, executory contracts are contracts in which the obligations have not been performed or not fully performed by both parties. Considering this point of view, therefore, the notion of pending contracts in art. 169 bis b. law is comparable to that of pending relationships provided in art. 72 b. law. The admission itself to the procedure does not change the discipline of the exe­cutory contracts. But with the (incomplete or complete) petition or with a separate request, the debtor may at any time ask the authorization to dissolve the executory contracts. This request is addressed to the court or, once the debtor has been admitted to the procedure, to the bankruptcy judge who supervises the Arrangement with Creditors. The executory contracts are dissolved from the date of the aforesaid specific petition. Only at the debtor’s request, suspension of a contract may be authorized for no longer than sixty days; and the latter period may be extended once only for the same period. Obviously the suspension or the dissolution of the contracts might cause prejudice to the other party. In the above mentioned cases, the other party shall be entitled to a compensation amounting to the damages due for non-performance. The debt in question shall be paid as an old debt existing prior to the Arrangement with Creditors. These debt are then without priority for the procedure.

5. The executory contracts in the Arrangements with Creditors on a Going Concern Basis

To facilitate the preservation of viable but distressed companies or businesses, the Italian legislature introduced a new procedure, called Arrangement with Creditors on a Going Concern Basis [54]. The model for this procedure is the discipline of the Arrangement with Creditors described above, but this type (sub-model) of arrangement is less frequently used than the liquidating arrangement. The goal of this special procedure [55] is to maintain the business operation while searching for a buyer, or for the approval of a restructuring plan [56]. Art. 186 bis, §§ 3, 4 and 5, b. law. regulates the treatment of executory contracts in the Arrangement with Creditors on a Going Concern Basis. This article applies without prejudice to art. 169 bis b. law., and the admission to this sub-procedure does not suspend and/or dissolve the executory contracts, even if the counterparty is a governmental authority. Furthermore, according to these rules the debtor (admitted to this type of Arran­gement) may continue to perform contracts with governmental authorities and participate in public tenders, if it complies with specific terms stated in the Law.

6. The global "Rordorf Reform"

As indicated in the introductory paragraph (§ 1), the Law concerning the business crisis should be completely reformed in the near future. At this precise moment, while almost all the European Union countries have recently adopted new insolvency laws, the Italian Law – in its general structure – dates back to 1942. It is now a widespread opinion that in Italy a complete reform of the entire Insolvency Law is necessary, not only for substantial reasons but also for the country’s image. Moreover, the frequent reforms which have occurred recently, as illustrated in the previous paragraphs, have created significant difficulties in the application of the law because – in a civil law legal system – the continuous modification of the rules hinders the creation of an established and uniform case-law. Considering these aspects, the need was «from all the scholars and the operators, to adopt an approach to reform which is no longer episodic and directed only to deal with the emergency, but [an approach to reform which is] systematic and organic, in order to shed clarity on a system that has become too confused» [57]. In this process, the Italian legislature will have to take into account the European Union legislation and in particular: a) the Regulation (EU) 2015/848 of the European Parliament and of the Council of May 20th, 2015 on insolvency proceedings; b) the Commission Recommendation of March 12th, 2014 on a new approach to business failure and insolvency. The Italian Legislature will also have to consider the model law on insolvency elaborated by the United Nations Commission on International Trade Law [58].

6.1. The general principles

Among the general principles indicated in the act of the Parliament that delega­ted the Government to reform the Insolvency Law [59], it is worth mentioning some terminological innovations, such as: a) the replacement of the word “Bankruptcy” with “Judicial Winding-Up Procedure” in accordance with a trend already observed in other European civil law countries (France, Germany and Spain). This change is justified by the need to avoid thene­gative and disparaging meaning that is traditionally associated with the word “Bank­ruptcy”. In fact, as any business activity implies a certain degree of risk and uncertainty, the unfortunate outcome (failure) may not be dependent on the entrepreneur’s abi­ As a result, the use of the word “Bankruptcy” can be inappropriate; b) the distinction of the concepts of crisis and insolvency, and the identification of the crisis as a probability of future insolvency. Furthermore, from the general point of view, the upcoming legislation: a) will give priority to the proposals that intend to overcome the crisis and ensure the business continuity, even by means of a different entrepreneur, as long as these proposals ensure the best satisfaction for the creditors[60]; b) will consider the Judicial Winding-Up (which should replace the current“Bank­ruptcy” procedure) as a last resort mechanism[61]; c) will ensure the specialization of the judges involved in insolvency procedures and the improvement of their skills.

6.2. The crisis of groups of companies

It is obviously not possible in this paper to analyse more thoroughly the general aspects of the Reform, but it must be pointed out that great importance is given to the necessity to establish rules on the crisis of the groups of companies that today are outside the scope of the Italian insolvency legislation. As a matter of fact, it is obvious that in this situation the crisis and/or the insolvency have features that are specific. In an effort to address this issue, the European legislation introduced some provisions in the above-mentioned EU Regulation 2015/848 on cross-border insolvency. Therefore, the upcoming Law should provide not only rules to allow a unitary procedure for the insolvency of the companies which are part of the same group, but also rules to establish reciprocal information duties in case of separate procedure tak­ing place before different courts. In particular, with reference to the unitary procedure of the group’s arrangements with creditors: a) it should be provided that a single court shall handle the procedure and that a single receiver must be appointed by the court; b) the presentation of a unitary proposal for the recovery of the “group crisis” will regulate intra-group operations and transactions to preserve the business continuity, and to guarantee the protection of the shareholders and of the creditors of each company part of the group. Also with regard to the unitary procedure of the Judicial Winding-Up of the Group, the Law is expected to identify only one competent judicial authority and court-ap­pointed administrator. The Government, among other things, will also have: a) to identify the criteria to proportionally allocate the costs of the proceeding among the companies part of the group; b) to grant to the court-appointed administrator certain powers to be exercised in respect also to the non-insolvent companies.

6.3. The Judicial Winding-Up procedure

Regarding the Judicial Winding-Up procedure which, as mentioned above, should replace the current Bankruptcy procedure, it should be based on the following fundamental principles: a) first of all, the strengthening of the powers of the court-appointed administrator, who will acquire a leading role (dominus) in the Judicial Winding-Up procedure, and whose action will be more effective and trustworthy through a series ofmeasures including: (a1) a more stringent regulation of incompatibilities of offices[62] in the event of subsequent insolvency proceedings; (a2) the definition by law of the minimum content of the liquidation plan; (a3) the possibility for the court-appointed administrator to file or continue specific lawsuits if they can beneficial to the insolvent estate; b) to limit the grounds for avoidance actions that aims at invalidating the deb­tor’s acts carried out before the beginning of the procedure; c) regarding the examination of claims, innovations should be introduced toensure that this phase is governed according to the criteria of promptness and concentration. These criteria consist in: (c1) facilitating the presentation of the creditors’claimapplication online, and restricting the possibility to submit late claims; (c2) examining each credit to be off-set [63] within the insolvency procedure; d) regarding the liquidation of the assets, the Law is intended to introduce procedures inspired by the maximum transparency and efficiency to be pursued also through the use of the most modern technologies. The entire administration of the liquidation is supposed to ensure the utmost surveillance, transparency and disclosure also through the use of the system so cal­led “Common”, which is based on three fundamental principles: – the introduction of a unified national online market for the assets to be sold; – the possibility accorded to creditors to purchase such assets if specifically authorized; – the establishment of one or more funds to manage the unsold assets. The Law also introduces some modifications with regard to the Release of the Debtor procedure [64]. The most significant innovations seem to be: a) to extend the discharge of debt to companies – and therefore not only to natural persons as in the present provisions – if is demonstrated that the directors or (in case of partnership) the partners, are worthy; b) to provide types of automatic [continua ..]

6.4. The reform of the Arrangements with Creditors

Regarding the reform of the Arrangements with Creditors, the future legislature seems, in general, willing: a) to allow the Arrangements with Creditors to have only a liquidation purpose;a1) when there are external resources that considerably increasing the creditors’ sati­sfaction;a2) when the payment of at least 20% of the total amount of unsecured claims is guaranteed; b) to redefine the method to verify the reliability of the company data reported in the proposal and its feasibility, by identifying the powers of the court to this regard; c) to eliminate the assembly of the creditors by providing online procedures to allow creditors to discuss the proposals and to express their vote; d) to review the current rules of executory contracts, with reference to their possible stay and dissolution, the role of the receiver appointed by the court, and thecompetence to determine the indemnity[67]; e) to provide detailed rules on the implementation of the plan, including the possibility for the court to entrust the implementation of the proposal to a third party; f) to integrate the provisions regarding the Arrangements with Creditors having the aim of the business continuity, by providing that the rules will apply:f1) even when there is an on-going business lease; as well asf2) when the Arrangement with Creditors provides, beside the business continuity, also the liquidation of the assets that are non-functional to the enterprise. In case the enterprise subject to the arrangement with creditors is a company, the legislature should also consider: a) to set rules to require upon the bodies of the company the obligation to prom­p­tlyimplement the proposal once it has been endorsed by the court; such rules should also provide that in the event of dilatory or obstructive behaviour, the implementation of the proposal may be entrusted to a provisional administrator; b) to coordinate the rules of the arrangements with creditors regarding the companies with the rules on transformation, merger and division.

7. Conclusion

Under Italian Law, there is not a unified treatment of the executory contracts when the debtor enters into a formal insolvency proceeding. Depending on the procedure and its goals, different rules apply. For instance, in the Arrangement with Creditors on a Going Concern Basis, since the Law obviously focuses on the continuation of the business activity (more than in the other formal procedures) the debtor, rather than the creditors, is given large discretion to determine the outcome of the executory contracts. On the contrary, in the Bankruptcy procedure the general rule is that, upon filing, all executory contracts are suspended. This is because the law gives the admi­nistrator the power to assume or reject the same executory contracts. It is, therefore, necessary to point out that the Italian Insolvency Law is under review from a global viewpoint. The Italian Parliament has recently approved the “Rordorf Reform” [68]. This new discipline, as we have seen, might foresee corrections and integrations for the rules on executory contracts, in both Bankruptcy and Arrangement with Creditors, but it is possible to say that the structure of the Law, and its principles will, probably, not change significantly on the topic of executory contracts. The principal innovations on the global “Rordorf Reform” – as noted above – will concern: a) regarding the Judicial Winding-Up procedure – which will replace the Bankruptcy procedure – the integration of the current rules with:a1) in case of prosecution or subentry of the administrator in the executory contracts, the limitation of the liquidation expenses to exclusively credits created during the liquidation procedure (not to previous credits, except the special disposition of other Laws);a2) the dissolutions of personal contracts, which do not continue without the agreement of the counterparty (specifically, the contract based on the intuitus personae, such as those of proxy and employees), for which must be written a similar rule to that currently contained in the current discipline of the procurement contract [69]; b)regarding the discipline of the Arrangement with Creditors, the specification of the rules on executory contracts, referring to their possible suspension or dissolution, and the rules on the court-appointed receiver[70]. The global reform intervenes realistically not only on the insolvency discipline but also on the discipline [continua ..]

NOTE