Merger by Incorporation and Bankruptcy: Analysis of Judgment No. 18261/2024

The recent judgment No. 18261 of July 3, 2024, issued by the Court of Cassation, offers important clarifications regarding the merger by incorporation of insolvent companies and the legal consequences in bankruptcy matters. This judgment is part of a complex legal framework, where civil and bankruptcy rules intertwine, highlighting the importance of understanding the extinction process of the incorporated company and the procedures to be followed.

Context of the Judgment

In this decision, it is emphasized that merger by incorporation leads to the extinction of the incorporated company. This implies that, if the latter is insolvent, it can be subjected to bankruptcy within one year of its cancellation from the company register, in accordance with Article 10 of the Bankruptcy Law. This aspect is crucial for creditors, as the possibility of declaring the incorporated company bankrupt persists, despite its formal extinction.

Establishment of Adversarial Proceedings and Role of the Incorporating Company

The judgment also clarifies the need for proper establishment of adversarial proceedings, as provided for by Article 15 of the Bankruptcy Law. It is highlighted that, despite the incorporated company being extinct, it retains its identity for the purpose of bankruptcy declaration. This aspect is fundamental, as it implies that creditors' rights must be protected through the observance of appropriate legal procedures.

• The incorporating company has the right to intervene in pre-bankruptcy proceedings.
• It can lodge an appeal against the bankruptcy judgment of the incorporated company.
• The debtor subject to the notification of the petition is identified as the incorporated company, despite its extinction.

Merger by incorporation - Insolvent incorporated company - Applicability of art. 10 Bankruptcy Law - Existence - Establishment of adversarial proceedings against the incorporated company - Necessity - Incorporating company - Right to intervene. In the context of bankruptcy, merger by incorporation, by creating an extinction-succession event for the companies involved, leads to the extinction of the incorporated company which, if insolvent, is subject to bankruptcy within one year of its cancellation from the company register, pursuant to art. 10 of the Bankruptcy Law. Therefore, for the correct establishment of adversarial proceedings under art. 15 of the Bankruptcy Law, the debtor subject to the notification of the petition and the notice of hearing must be identified as the incorporated company which, even if extinct, retains its identity for the purpose of any bankruptcy declaration, and the incorporating company may, moreover, intervene in the pre-bankruptcy proceedings and lodge an appeal, as an interested party, against any bankruptcy judgment of the said incorporated company.

Conclusions

In conclusion, judgment No. 18261/2024 represents a significant step forward in understanding the dynamics related to merger by incorporation and bankruptcy. It reminds us that, even in complex situations such as that of insolvent companies, legal rules must be scrupulously followed to ensure the protection of creditors' rights. The role of the incorporating company is not merely passive but active, allowing it to protect its interests in a context of uncertainty and legal risks.