Italian Insolvency Law Reform
17 January 2019
On January 10, the Council of Ministers adopted the legislative decree implementing delegated law no. 155 of 19 October 2017 (Delega al Governo per la riforma organica delle discipline della crisi di impresa dell’insolvenza), containing the codex of the crisis of enterprises and insolvency (CCI).
In this way, a codex for the coordinated and unitary regulation of crisis situations or of insolvency situations will be introduced into the Italian system, albeit with entry into force deferred over time (most provisions of the CCI will enter into force only after 18 months following publication in the Official Gazette). In particular, the reform aims to:
promote preventive and early restructuring of economically sustainable companies in crisis (understood as a state of economic and financial difficulty that makes insolvency likely);
give entrepreneurs a second chance;
safeguard the company’s going concern (so-called rescue culture); and
make restructuring, insolvency and debt discharge procedures more effective and less time-consuming.
Another goal pursued with the introduction of the CCI is to facilitate the intervention of foreign investors in particular through (i) the simplification of insolvency procedures and their harmonisation with EU law so as to make the management of insolvency more effective, given that the effects often extend beyond national borders; and (ii) the reduction of differences of interpretation and uncertainty in the application of the legislation.
Among the principal changes, we note the following:
the introduction of an early warning procedure and assisted crisis composition for unlisted small and medium-sized enterprises, aimed at the early detection and resolution of crisis situations;
the abandonment of the expression "bankruptcy" in favour of "judicial liquidation", in order to avoid prejudicial connotations associated with the concept of the former;
greater responsibility for the administrative and supervising bodies of companies in the handling of crisis situations;
the judicial liquidators will have wide powers to pursue actions for liability against shareholders, officers, directors for mismanagement, unlawful trading and other actions creating damage to a company;
the reformulation of certain rules (in particular with regards to the pre-insolvency workout agreement with creditors (concordato preventivo)) which are not being applied in the same way by the different territorial courts;
the introduction of the possibility for groups of companies to deal with crisis situations in a coordinated manner;
a special role will be kept by the Ministry of Justice containing the names of entities (either partnerships or companies) qualified - subject to meeting certain requirements of professional skill, independence and experience - to undertake, upon appointment by the courts, functions of management and control in the context of an insolvent debtor;
the introduction of a single procedural model intended to expedite proceedings; and
speeding up the closure of the judicial liquidation procedure.