EU cross-border insolvency: the decision of the Italian Court of Cassation on jurisdiction to declare the insolvency of a company operating in different countries

Luca Davini
Avvocato in Milan and Turin

With decision dated 20th April 2021, no. 10356, the Italian Court of Cassation intervened on the issue relating to the jurisdiction to declare the insolvency of a company operating in different countries.

Through this decision, the Court established that this jurisdiction to declare insolvency belongs to the judge of the EU Member State in which the so-called “center of main interests” (i.e. COMI) of the company is established.

In this sense, according to the provisions of EU Regulation no. 848/2015 relating to insolvency procedures, the COMI matches the company’s registered office, provided that this registered office has not been subject to transfer to another State in the three months preceding the application for opening the insolvency procedure (as in this case there would be a fictitious transfer).

The case in question concerns a sentence issued in August 2018 by the Italian Court of Velletri, by which the bankruptcy of a company was declared, which however raised a complaint against the ruling on the basis that the jurisdiction – according to the company – did not belong to the Italian judge, but to the English judge as the statutory seat had been moved to London.

In the Court of appeal, the Court confirmed the first instance ruling, thus rejecting the complaint presented by the company and also finding the fictitious nature of the transfer of the operational seat to London, as it derives from a significantly different concrete situation which does not coincide with the information reported on the companies register.

Having brought the issue before the Italian Cassation Court, the Supreme Court first clarified that – to the present case – it must be applied the rule set out in Regulation no. 848/2015. Secondly, in compliance with the provisions of said Regulation, the Court underlined that, until proven otherwise, the presumption of coincidence of COMI with the registered office of the company is valid.

At this point the Court – recalling the European legislation on the transfer of the registered office during the so-called “suspicious period” – clarified that this transfer is effective (and, consequently, the court of the State in which the seat was transferred would have jurisdiction) as long as it is not carried out in the three months prior to the request for opening the insolvency procedure.

In the present case, although the company had carried out this transfer before the three months, the Supreme Court – as stated by the Court of Appeal – recognized the fictitious nature of the transfer, as no economic activity was carried out in the new seat, nor had the center of the company’s managerial, administrative and organizational activity been moved there.

Consequently, the Supreme Court rejected the appeal, reaffirming the competence of the Italian judge and establishing the general principle according to which the jurisdiction to declare the insolvency of a company belongs to the judge of the State in which that company has its COMI (i.e. its registered office), provided that this office does not result from a fictitious transfer made by the company.

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