How can a foreign bankruptcy proceeding sell a real estate located in our country? Although European law appears very clear and straightforward on this issue, the practical aspects of the enforcement are more tricky than it might seem.
Whenever a subject is declared bankrupt in a State of the European Union, the effects of the bankruptcy proceedings also extend to any assets the debtor has in the other States of the European Union. However, how bankruptcy declared in one Member State operates in the other Member States depends on the law of each individual State.
Specifically, the effects of bankruptcy proceedings declared by the Court of one Member State on the assets of the subject who has been declared bankrupt located in another Member State are jointly governed by EU Regulation No. 848/2015 and EU Regulation No. 1215/2012.
EU Regulation No. 848/2015 provides for how to recognize foreign bankruptcy declarations in other Member States of the European Union. For this purpose, bankruptcy declarations made in one Member State are recognized in other Member States without further formalities, according to Article 32 of EU Regulation No. 848/2015.
On the other hand, EU Regulation No. 1215/2012 recognizes the enforceability of decisions in civil and commercial matters issued in one EU Member State in all other Member States. For this purpose, the above Regulation requires a certificate concerning the decision and its translation into the language of the receiving Member State. The model of the certificate is set out in Annex I of EU Regulation No. 1215/2012 and must be attached to the certified copy of the decision.
Then, in order to proceed with the liquidation of the assets of the subject who has been declared bankrupt, in addition to the declaration of bankruptcy combined with Annex I and translated into the language of the State where the assets are located, the receiver must also obtain (if this is not already within his or her powers) a specific authorization for the sale of the assets from the Judge who declared the bankruptcy.
Once all the above documents have been obtained, enforcement will take place according to the law of the Member State where the assets are located.
As far as Italy is concerned, if the subject who has been declared bankrupt is the owner of real estate, it will be necessary to first transcribe the bankruptcy declaration, Annex I and the authorization for sale in the Land Registry where the real estate is located.
After this preliminary step, it will be necessary to file a petition with the Court of the place where the real estate is in order to appoint the subject who, acting as delegate of the foreign receiver, will handle the sale of the real estate and will then send the money obtained from the sale to the receiver.
Even if, at first glance, the liquidation of the assets appears to be rather simple and quick, this impression must, however, clash with reality. The risk is in fact that there will be little cooperation from the clerks of the Court and people in charge of the Land Registry, since this is, at the end of the day, an uncommon procedure, with the consequence of an inevitable lengthening of the needed time.