I OVERVIEW OF RESTRUCTURING AND INSOLVENCY ACTIVITY
i Liquidity and state of the financial markets
The trend in macroeconomic terms on the Italian market continues to be positive at the beginning of 2017, although the growth of Italian productivity is lower compared to other European countries.
The very high public debt remains a heavy burden on the Italian economy and a major source of vulnerability, especially in the context of protracted weak growth.
The figures for the first quarter of 2017 relating to the public debt and presented in the Economic and Financial Document showed that public debt peaked in April 2017 up to €2.27 billion. In this scenario, government debt equates to over 132.3 per cent of GDP.
Companies' production indicators confirm that productivity remains lower than in 2007, although slightly improved compared to 2016 figures.
Overall, companies' financial positions have continued to strengthen gradually; bankruptcies have diminished by 16.8 per cent.
In this context, the existence of huge amounts of nonperforming loans still represent a serious concern for Italian financial markets. On this point, great attention should be paid to the innovations brought by Law Decree 14 February 2016 No. 18, which introduced a public guarantee mechanism applicable to securitisation procedure of non-performing loans, thus improving the economic value of doubtful loans granted to subjects in state of financial crisis.
ii Market trends in restructuring procedures and techniques employed during this period
The latest figures related to insolvency and bankruptcy procedures have shown a steady improvement since the previous year.
In the first quarter of 2016, 3,600 companies applied for a bankruptcy procedure - a decrease of 4.5 per cent from the previous year. The numbers of the overall insolvency proceedings have also shown encouraging results, significantly decreasing for the first time since 2008, namely by 24.5 per cent in composition proceedings, although this drop is deemed to be mainly the result of the groundbreaking changes made in the context of this proceeding.
This positive trend has also been confirmed for the first quarter of 2017. Figures show that 2,998 companies applied for a bankruptcy procedure in this period, a decrease of 16.8 per cent from the previous year, of 20.2 per cent from 2015 and of 20.3 per cent from 2014. In the same period, the numbers of insolvency proceedings have also shown positive results, decreasing by 26 per cent from the previous year.
II GENERAL INTRODUCTION TO THE RESTRUCTURING AND INSOLVENCY LEGAL FRAMEWORK
The main source of Italian insolvency law is Royal Decree No. 267 of 16 March 1942 (the Insolvency Act), which has been amended and integrated from time to time by the Italian legislator.
The Insolvency Act provides for several bankruptcy and restructuring proceedings that have been amended in the last years and some of which are described below.
i Legal procedures
The bankruptcy proceeding is the most invasive procedure for a debtor. The law specifically indicates which debtors are subject to the bankruptcy procedures (not all debtors can fall bankrupt). In general, the law states that the bankruptcy procedure applies to ‘any company or individual whose main activity consists of the production or trade of goods and services'. A debtor is declared insolvent when it is no longer able to regularly meet its payment obligations. The insolvency status is per se a situation that justifies a declaration of bankruptcy by the relevant court, even where the insolvency has not been caused by the debtor's misconduct.
The procedure is started by an order of the court having jurisdiction over the debtor's principal place of business on the basis of a petition, which may be filed by the debtor itself (or the directors of the debtor company), a creditor, the public prosecutor, or the bankruptcy court ex officio.
The proceeding is carried out and supervised by a receiver (appointed by the court), a deputy judge, and a creditors' committee representing all the creditors.
Upon issuance of the bankruptcy decision by the court, the debtor no longer has the legal right to manage its business and is no longer able to dispose of its assets. All legal actions taken by the creditors against the debtor are suspended.
The receiver is a public officer and is required to perform his or her duties in person. The receiver is paid through the debtor's assets, and such remuneration ranks as ‘super-senior' over the creditors' claims. Law imposes certain specific duties on the receiver. In particular, the receiver manages the company's assets and operates in the interest of the creditors. His or her main task is that of disposing of the company's assets in order to obtain proceeds necessary to repay the creditors, who will be reimbursed according to a distribution plan on the basis of the order of claim priority established by the Italian Civil Code and by several provisions of the Insolvency Act, and certified by the court. Priorities are normally granted by pledges, mortgages or other liens voluntarily granted by, or imposed on, the debtor. Claims of Italian and foreign creditors rank equally.
Before the execution of the distribution plan, the receiver must submit a final report to the deputy judge with a full description of all the activities carried out in the assets management and in general in the business administration. Creditors may file claims against the final report. Once the motions have been decided, the deputy judge orders the implementation of the distribution plan. Creditors are always entitled to oppose the distribution plan in order to obtain payment of any unrecovered portion of their claims and of interest thereon.
Bankruptcy proceedings may also end up with a settlement accepted by the creditors, as described below.
Law No. 132/2015 made significant changes to the bankruptcy proceeding (see Section III, infra).
Settlement of bankruptcy proceeding
The Insolvency Law allows creditors and, under certain circumstances, the debtor to have recourse to a procedure within the bankruptcy proceedings. In particular, once the court has set out a timetable for the distribution of proceeds, a settlement proposal could be submitted by a creditor or the debtor, which should, in principle, guarantee repayment of the debts, either greater or quicker than the one provided for under the bankruptcy distribution.
If the court decides that the settlement proposal is in the best interests of the creditors, the court will issue a decision by ordering to notify all creditors of the proposal. For the settlement to be effective, the proposal has to be accepted by the majority of creditors.
Composition with creditors proceeding
While the bankruptcy procedure is highly regulated and is under the full control of the court and the receiver, the changes of law implemented in the past years have granted to the debtor a higher level of autonomy in the context of the composition with creditors proceeding.
In general, a company applies for the protection of a composition procedure (concordato preventivo) when it is either insolvent (but believes it is in a position to repay its creditors, at least partially) or it is suffering a crisis that has, however, not yet reached the level of insolvency.
The court, once it has admitted the company to the procedure, appoints a commissioner who acts as a public officer.
During the procedure, the assets continue to be managed by the debtor company, while the commissioner supervises the management of the company in the interest of the creditors.
The petition must be accompanied by a concordato plan, which, inter alia, shall include:
- a an updated economic and financial statement of the company;
- b an analysis of all the economic activities carried out by the company, including a list of all creditors and a description of the relevant credits and of any pre-emption rights;
- c a list of all people having personal and property rights over the debtor properties; and
- d an evaluation of goods and particular categories of creditors.
The concordato plan must describe the ways in which the creditors will be repaid and the relevant percentage, and shall be accompanied by a report drafted by an independent expert that will certify the correctness of the data reported and the feasibility of the plan itself. The commissioner, inter alia, expresses his or her opinion on the feasibility of the concordato plan.
As a general rule, the concordato plan must be approved by the majority of the non-secured creditors; to the extent that the plan provides that the secured creditors are entirely paid within 12 months from the final ‘confirmation' of the procedure (i.e., the declaration by the judge that the procedure is properly completed), secured creditors are not admitted to vote.
The composition procedure is governed by the court, which plays a key role in terms of supervision and implementation. Although an intensive debate exists at the level of such interference, much depends on the approach of the relevant court where the procedure is started. Another significant characteristic of the composition procedure is that, once approved by the majority of the creditors, the concordato plan proposed by the company is binding on all creditors (even those dissenting).
It is possible to submit a request to the court for admittance to the composition procedure by postponing the filing of the concordato plan and of all the other documents required by law (the pre-concordato request). The request must be accompanied, inter alia, by the filing of the three latest approved balance sheets and a detailed list of all the creditors. The condition for the admittance is the non-filing of a petition that has been rejected in the previous two years.
As soon as a pre-concordato request is filed, the court, subject to its positive evaluation, admits the company to the pre-concordato phase, granting the company between 60 and 120 days for filing the concordato plan and any other related documents. This is intended to allow the debtor to seek immediate protection by freezing any enforcement proceedings by creditors, but during the pre-concordato phase all extraordinary activities of the company must be authorised by the court. The court often sets thresholds of value above which such authorisation is required.
The court allows the company to decide whether a certain activity can be qualified as ‘extraordinary' and oversees the company, which must provide certain information (mainly financial) during the pre-concordato phase. The court, after the publication of the pre-concordato request, may appoint a judicial officer to monitor whether the distressed company is acting for the purpose of settling all creditors. Certain periodic reporting obligations are imposed on the debtor regarding the financial management of the company during the pre-concordato phase. In the event of breach of such obligations, the court may declare the company bankrupt.
During the pre-concordato phase, not only are enforcement proceedings frozen, but interim actions are prevented.
Distressed companies often pose a risk for their partners and counterparties; in fact, in the event that the company is declared bankrupt, any payments made to suppliers or banks are at risk of being clawed back or revoked by the bankruptcy receiver. This can often result in further deterioration of the business of the company, making the crisis worse. To avoid this, and to create incentives for business partners of the debtor not to stop doing business with it and to facilitate access to credit during the period of distress, the law provides the following:
- a from the day on which the request is filed with the Register of Companies (i.e., one day after it is submitted to the court), the debtor may be authorised to engage in transactions in the ordinary and extraordinary course of business (those transactions will not be subject to clawback actions);
- b all credits that have arisen as a result of transactions authorised by the court (even unsecured) during the procedure take priority (within certain circumstances, even over secured claims); and
- c payments made by the debtor after the request is filed with the Register of Companies are not subject to clawback action, even if the distressed company goes bankrupt.
Along the same lines, the debtor is allowed to terminate unprofitable or excessively burdensome contracts with the prior authorisation of the court. This is aimed at preserving the goodwill of the debtor and increasing the chances of its recovery.
Recently, certain groundbreaking changes have been made to this procedure. Creditors are allowed to submit their proposal or offer for the concordato, provided that certain requirements are met. Debtors are entitled to ask the court for authorisation to obtain interim financing. For more details, please refer to Section III, infra.
Article 182 bis of the Insolvency Act provides for the rules governing the debt restructuring agreement. The debt restructuring agreement can be considered a private agreement whereby the debtor and the creditors, representing at least 60 per cent of the total debt, reach an agreement on a repayment plan. Those agreements are subject to confirmation by the competent court. Restructuring agreements do not, however, bind those creditors that were not party to it.
These agreements provide the procedures and timing for the repayment of such creditors.
If debts are already due and payable at the confirmation of the agreements by the court, creditors not party to the restructuring agreements must be paid either within 120 days or 120 days after the debts become due. There are also some provisions applicable to both this proceeding and the aforementioned composition with creditors proceeding:
- a similar to ‘first-day orders' in the US Bankruptcy Code, the debtor may submit an application to the court to obtain new debtor-in-possession (DIP) financing from banks or other sources of credit, and to pay creditors that are crucial to ensuring the continuity of the business. Such financing will rank as a super-senior priority, which is an incentive for lenders to provide financing to a distressed company;
- b there has been reinforcement of the independence requirements of third-party experts engaged to attest the feasibility of the restructuring plan, the purpose of which is to prevent cases of conflicts of interests between auditors and the debtor. Experts responsible for false statements or omission of important information in such situations are now subject to criminal liability; and
- c during the restructuring procedures, the provisions of law imposing the reintegration of corporate capital in the event of losses are not applicable. This is designed to give a distressed company time to prepare a restructuring plan without the pressure of compliance with the deadlines set by those rules and, primarily, to eliminate the need to spend money necessary to increase corporate capital after a loss (which might immediately jeopardise any attempt to re-launch and restructure), especially when the survival of the company is still in doubt.
Law No. 132/2015 introduced the new Article 182 septies providing for a ‘special' debt restructuring agreement, applicable in case the majority of the total debt is towards banks or credit institutions. For further details, see Section III.vi, infra.
Compulsory liquidation is an administrative procedure controlled by state officers instead of by the courts. The procedure is used when the debtor's business is deemed to be of public interest, such as insurance companies, banks, cooperatives and nonprofit entities, which are subject to a number of governmental controls. The purpose of this procedure is to achieve recovery of the business through a settlement or an arrangement plan. The debtor, the directors of the debtor company and any of the creditors are entitled to apply to the court in order to start the procedure. The court is under the obligation to seek the advice of the governmental agency responsible for supervising the debtor's enterprise. The judge may initiate the proceeding by declaring the insolvency of the debtor and appointing a liquidator. All legal actions by creditors against the debtor are then suspended, with the exception of those aimed at ascertaining the amount of the claim. The liquidator, who also acts as a public officer, is assisted by a supervisory committee consisting of a number of experts, whose number can vary from three to five and who are not required to be creditors of the debtor (even if this might be preferable). Unlike in other insolvency proceedings, there is no requirement for a judge or a commissioner to be in charge. The liquidator must review the claims and evaluate whether the settlement plan is feasible.
The extraordinary administration procedure applies to big companies falling within certain specific requirements, the occurrence of which is checked by the relevant court where the request for the extraordinary administration procedure is filed. The procedure applies to companies employing at least 200 permanent workers for at least one year, and having an overall amount of debt, the value of which is no lower than two-thirds of the aggregate value of both assets and revenues. For the application of the extraordinary administration, the company must have ‘concrete chances for the recovery of the financial stability'. After consultation with the Ministry of Economic Development and the Ministry of Economy, the court issues an order declaring the insolvency of the company. The Ministry of Economy appoints an ‘extraordinary commissioner', who proposes a plan for the disposal of the assets or a recovery plan within 60 days of his or her appointment. All legal actions initiated by creditors against the company are suspended as a consequence of the foregoing order. One of the most significant extraordinary administrations in Italy has been the Parmalat case in 2005. The magnitude and relevance of the Parmalat case - and its international implications - have resulted in several amendments to the Italian legislation on insolvency matters.
ii Duties of directors of companies in financial difficulties
According to the provisions of the Italian Civil Code, directors must act with a duty of care and must comply with certain rules imposed by law and by-laws relating to the fiduciary responsibilities in day-to-day management. The directors are jointly liable with the company for damages deriving from non-compliance with said duties. In all cases, the directors are jointly liable if they fail to adequately supervise the general conduct of the company's affairs or if, being aware of prejudicial acts, they do not act in order to prevent any harmful activities, or to eliminate or reduce the harmful consequences of such activities. Liability for acts or omissions of directors does not extend to any directors that, acting without fault, express their dissent without delay, such dissent being registered in the minute book of the meetings and resolutions of the board of directors, with written notice also to the chair of the board of auditors. Again, according to the Italian Civil Code, directors are held liable to the company's creditors for noncompliance with their duties concerning preservation of the company's assets. The action can be brought by creditors when the company's assets prove insufficient to satisfy their claims. In the event of bankruptcy or compulsory administrative liquidation, the action against the directors can be brought by the receiver in bankruptcy or by the commissioner. A waiver of the action by the company does not prevent the company's creditors from exercising their legal rights against the directors.
iii Clawback actions
The suspect period has been fixed in a maximum of two years prior to the date of the bankruptcy declaration (in other cases the suspect period is 12 months and, in certain specific cases, the suspect period is reduced to six months).
In the event the bankruptcy declaration occurred after the petition of a concordato procedure, the suspect period commences on the day in which the petition is published in the company register.
The Insolvency Act states that:
The receiver is entitled to require that the transactions carried out by the debtor to the detriment of the creditors shall be ineffective, according to the provisions of the Italian Civil Code. The action can be filed before the insolvency court against both the direct party of the contract and, if the case, its successors in title.2
Unless the other party proves that it was not aware of the insolvency status of the debtor, it is possible to clawback the following transactions:
- a non-gratuitous acts performed in the one-year period preceding the declaration of bankruptcy where the transactions carried out or the obligations assumed by the bankrupt party exceeded more than one-quarter of the paid or agreed consideration;
- b acts extinguishing the payable and overdue pecuniary debts not made in cash or by other normal payment methods were carried out in the one-year period preceding the declaration of bankruptcy;
- c pledges, anticresi and voluntary mortgages created by an agreement of the parties during the one-year-period preceding the declaration of bankruptcy for previous undue debts; and
- d pledges, anticresi, voluntary and judicial mortgages (mortgages created by an order of the court) created during the six-month period preceding the declaration of bankruptcy for overdue debts.
In the event that the receiver proves that the other party was aware of the insolvency status of the debtor, it is possible to claw back the repayments of certain overdue debts resulting from the non-gratuitous acts and those constituting a preemptive right for debts (even those incurred by third parties) if carried out in the six-month period preceding the declaration of bankruptcy.3
III RECENT LEGAL DEVELOPMENTS
i Law Decree No. 83/2015 converted into Law No. 132/2015
The aim of the Law Decree is to create a system of effective measures for financial distress situations to limit the economic loss either from an entrepreneurial perspective or in the financial field. Another aim is to provide companies with appropriate measures of support for a productive recovery, with the intent to provide benefits for the employment sector and, more generally, for the national economy.
The most groundbreaking changes regarding the composition proceedings introduced: the possibility for qualified creditors to file competing proposals; the obligation to reimburse a minimum percentage of unsecured creditors; and, in the event the concordato plan provides for the transfer of the company, a going concern or key assets, a duty for the court to start a procedure to research the best offer.
Creditors representing at least 10 per cent of the total debt are entitled to file a proposal for a concordato preventivo plan, which shall then be evaluated by the creditors alongside the one filed by the debtor. This right is not granted if the concordato plan filed by the debtor provides that at least 40 per cent of unsecured creditors are repaid (30 per cent if the plan provides for business continuity).
The minimum percentage
A concordato plan that does not provide for business continuity shall provide that at least 20 per cent of the unsecured creditors are repaid.
The court shall start a compulsory tender for the research of the best offer in the event the concordato plan provides for the transfer of the company, of a going concern or of key assets. Offers will be compared on an economic basis. The court is required to set the criteria for the tender, to be determined on a time-to-time basis depending on the specifics of the case.
The majority principle in the approval stage
The mechanism of silenzio assenso concerning the approval of the concordato plans has been removed (silenzio assenso means that the non-vote of a creditor in the approval stage is counted as approval in the calculation phase). This amendment, jointly considered with the new provisions on the minimum threshold of 20 per cent and on the competing proposals, makes the performance of the plan more difficult and its positive execution riskier.
A debtor who has already filed a petition for the admission to a creditor composition procedure or an application for the approval of a debt restructuring agreement can obtain new financing or continue to use existing receivables credit lines. The possibility is granted provided that:
- a the new financing is required for urgent operational needs;
- b the debtor is unable to obtain the financing in a different way;
- c the debtor indicates the envisaged use of the financing; and
- d not granting the financing would result in the disruption of business continuity.
The debt restructuring ‘special' agreement
New Article 182 septies has been introduced in the Insolvency Act, according to which, in the event the majority of the total debt is towards the category of banks and credit institutions, the debt restructuring agreements entered into with at least 75 per cent of such category is automatically binding for the remaining 25 per cent as well, and also in the case of non-voting or absent creditors (new rules regarding the duty of correct information in favour of the creditors have been introduced). To ensure the respect of the par condicio creditorum principle, Article 182 septies provides that the agreement shall be the only one entered into with the category and shall be final and binding for every creditor under the same terms and conditions.
ii Other significant changes regarding the bankruptcy procedure
Law No. 132/2015 introduced the following new provisions regarding the appointment and the revocation of the receiver, the liquidation phase and the maximum duration of the procedure:
- a litigation procedures that are related to the bankruptcy proceeding are treated as a priority by courts;
- b the receiver shall provide a liquidation plan within 60 days from the draft of the inventory and in any case no later than 180 days from the bankruptcy declaration. The law provides for the revocation of the receiver in case of nonfulfilment of these obligations;
- c payment of liquidated assets prices can be made by instalments;
- d the liquidation procedure can be completed notwithstanding litigation procedures are still pending. Further incomes will be distributed according to the court resolution for the approval of the distribution plan; and
- e the completion of the liquidation procedure shall occur within two years from the bankruptcy declaration. Time extensions can be granted subject to specific needs.
iii The Law Decree No. 69, dated 3 May 2016
A further cause of revocation of the receiver has been introduced by the Law Decree No. 69, dated 3 May 2016 in the event of non-submission of the periodical report for the income distribution. The revocation cause applies provided that the liquidation procedure has generated income to be distributed.
Further amendments have been introduced with the intent to facilitate the obtainment of financing by entrepreneurs in the course of their business activity.
Entrepreneurs can grant pledges on moveable assets (excluding registered moveable assets) to guarantee their debts. The pledge shall be executed in writing and shall describe the parties, the assets, the credit and the maximum amount guaranteed. The guarantee becomes effective with the filing in the registry of non-possession pledges held by the Italian Revenue Agency. In the event of enforcement of the guarantee, the sale is carried out by the creditor on the basis of a competitive procedure and according to the value appraisal. Parties can provide for the possibility to lease the assets; in this case the instalments will be accounted for up to the full reimbursement of the debt. In case of bankruptcy, the sale is only admitted provided that the creditor is ranked as privileged.
To assist financing with guarantees, entrepreneurs can also transfer properties in favour of banks or credit institutions. The effectiveness of such transfers is subject to the condition precedent of non-payment for a period of six months after the expiry of at least three nonconsecutive instalments unpaid.
Furthermore, the Decree provides for two amendments in the section regarding the performance of the creditors' meeting by way of electronic devices:
- a the court, considering the number of creditors and the total amount of the debt, may decide the creditors' meeting to be held with the support of electronic devices, provided that said devices can effectively ensure the correctness of the meeting; and
- b in the event the court decide for creditors' meeting by way of electronic devices, the discussion on the proposal of the debtor, and eventually on the competing proposals, is regulated by way of the decree issued by the court at least 10 days prior to the date scheduled for the meeting.
IV SIGNIFICANT TRANSACTIONS, KEY DEVELOPMENTS AND MOST ACTIVE INDUSTRIES
Despite the weak but steady growth observed in the last two years, Italian companies are still suffering the negative consequences of the contraction of domestic demand following a weakening of foreign demand.
Top-ranking Italian businesses are still living within the context of financial difficulties, which in the worst cases have required companies, depending on the seriousness of such situations, to resort either to bankruptcy proceedings or insolvency proceedings.
It is also worth mentioning that when dealing with distressed companies, either as an investor, debtor or creditor, special attention must be paid to Law Decree No. 231 of 8 June 2001 (Law 231), which concerns the administrative liability of legal entities, companies and associations without legal capacities, and the consequences of its violation by the company.
In particular, the application of Law 231 becomes more important when the distressed situation of the relevant company is a consequence of (or simply occurs in the context of) the commission by the entrepreneur (or by the board of directors) of specific crimes.
The commission of those crimes can trigger the submission of the company itself to certain sanctions, including the confiscation of the company's properties, if the company did not create a system capable of protecting itself from the negative consequences of the commission of those crimes by physical individuals operating in the name or on behalf of the company. Therefore, in evaluating a business opportunity, the investor has to take into account any possible consequences in the event that a violation of Law 231 has been charged to the company. In fact, the creditor's right to be satisfied by the company's assets or the company's right to recover from the distressed situation (sometimes) thanks to the intervention of a third-party investor could be overridden by the state's interest in confiscating all (or part of) the assets of the company, to the detriment of creditors and all other interested parties. According to a recent decision of the Supreme Court, this principle, according to which the interest of the state has priority over the interests of the creditors, has been slightly overridden, to the benefit of the creditors and the company. This decision is quite important and it would be suitable for a provision of law to be implemented to confirm these principles.
On 20 May 2015, the European Parliament issued the new Regulation (EU) 2015/848 (the Regulation) on insolvency proceedings, which becomes effective on 26 June 2017 and will replace Regulation (EU) 1346/2000.
It is worth mentioning that different dates of effectiveness have been set for the following Articles of the Regulation:
- a Article 24, Paragraph 1 on the set-up of a national insolvency database will apply from 26 June 2018;
- b Article 25 on the interconnection between national insolvency databases will apply from 26 June 2019; and
- c Article 86 on information regarding national and European insolvency proceedings has started to be applied from 26 June 2016.
The new Regulation has been developed in the context of a new awareness of insolvency. The aim of the Regulation is no longer the sale of the company assets to achieve the reimbursement of the creditors, but is mainly the saving of the business and the company's productivity.
The following changes, inter alia, have been included:
- a a broadened field of application of the Regulation has been introduced: Article 1 provides that the Regulation applies to ‘public collective proceedings, including interim proceedings', aiming at the rescue, the completion of a debt restructuring agreement, the company reorganisation or the company assets liquidation;
- b the rules regulating the applicable jurisdiction and the centre of main interest are now defined by the Regulation as ‘the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties' and the national courts are now allowed to claim the jurisdiction in the event ‘the company's actual centre of management and supervision and of the management of its interests is located' within its territory, and ascertain ex officio the correctness of the jurisdiction;
- c it is now possible to suspend or refuse secondary insolvency proceedings in the event of contrast with a connected insolvency procedure dealt by another Member State;
- d an international network for the insolvency databases has been created, provided for by Article 24 of the Regulation; and
- e a duty of cooperation between different Member State courts has been introduced in case of insolvency proceedings regarding two or more companies part of the same group.
The Regulation will apply from 26 June 2017, with a few exceptions among Member States.
Vi FUTURE DEVELOPMENTS
As stated above, since the Parmalat case in 2005, the Italian legal framework on restructuring has been made more effective than ever thanks to a series of interventions aimed at granting more protection to all those entities involved from a creditor's perspective.
In February 2016, the Council of Ministers approved the law bill consisting of 15 articles, drafted by the Rordorf Commission, for the delegation to the government for the drafting of a consolidated act for company crisis and insolvency.
Should the law bill be converted in the formulation approved by the Council of Minister, it shall have a revolutionary effect on the sector. It is worth noting that the law bill, inter alia, has provided for the removal of the word ‘bankruptcy' in the consolidated act, given the negative meaning and effects that are related to this word. The aim is, therefore, not only the merging, but also the enactment of a full ‘restyling' of the rules governing bankruptcy and restructuring procedures, also taking into account the experiences accomplished by the practice in foreign countries.
The main goal is a simplification of current legislation to make it more intelligible, also in the interest of nonprofessionals, and a noteworthy reduction of the costs related to the proceedings. Particular attention has been paid to the category of the debtors, who, in most cases, are people with a low or absent degree of juridical and economic knowledge and are particularly exposed to the debt growth risk.
The delegation, inter alia, regards several aspects related to:
- a company groups;
- b alert and mediation procedures;
- c debt-restructuring agreements and repayment plans;
- d creditor-composition proceedings;
- e restructuring programmes;
- f over-indebtedness procedures;
- g guarantees; and
- h extraordinary administration.
The legislative process is currently pending for final approval. Following the approval of the Italian Chamber of Deputies, the law bill is pending before the Italian Senate of the Republic.