As you are probably aware, the Business Crisis and Insolvency Code, codified in Legislative Decree 14/2019, finally entered into force on 15th July. Its entry into force, with the exception of a few provisions, has been postponed several times and the text has been subject to numerous amendments, the last one just a few days ago with Legislative Decree 83/2022 (published on 1st July).
The Code contains (partly in implementation of EU rules) numerous measures for managing crisis situations, with the aim of providing the debtor, creditors and other interested parties with the possibility of finding solutions that are best suited to the specific case.
The new discipline is very articulate and complex, therefore it certainly cannot be summarised in one post. Thus, we shall limit ourselves here to pointing out a few aspects:
1. The term ‘bankruptcy‘ (fallimento) disappears and is replaced by ‘judicial liquidation' (liquidazione giudiziale), the name of the institute that substantially resembles the current bankruptcy.
2. The collective entrepreneur shall implement an organisational, administrative and accounting set-up adequate for the timely detection of the state of crisis, which shall be designed such as, inter alia, to (a) detect any asset or economic-financial imbalances; (b) verify the sustainability of the debts and the prospects of business continuity for at least twelve months.
3. The negotiated settlement procedure, introduced by Decree-Law 118/2021, has been substantially transposed into the Code.
4. With regard to the obligations of creditors, both financial and non-financial, in addition to those provided for under the negotiated settlement, during negotiations and proceedings for access to the crisis resolution measures, creditors shall behave in good faith and fairness, shall cooperate loyally with the debtor and the bodies of the proceedings, and shall respect the obligation of confidentiality on the debtor's situation. Therefore, particular attention shall be paid whenever a client is involved with a company in crisis.
5. Protective measures (prohibition of the commencement and continuation of enforcement and precautionary actions on the debtor's assets or on the assets or rights with which the business is carried on): there is a wide possibility for the debtor, even during negotiations (before having requested access to a crisis resolution measure), to request such measures from the court.
6. Among the crisis resolution measures, in addition to significant changes to the newly introduced arrangement with creditors (Legislative Decree. 83/2022, published on 1 July) is the endorsed restructuring plan (piano di ristrutturazione omologato, PRO), which can be described as an arrangement with creditors simplified in terms of the procedure and implementation time (in a nutshell: the debtor proposes a restructuring plan that is submitted to the creditors' vote and is endorsed by the Court if it obtains the approval of the majority of the creditors and, in the event of objection by any creditor, if it is deemed to be convenient with respect to judicial liquidation).
7. The old regulation will continue to apply to proceedings commenced before 14.7.2022.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
