The law 19 October 2017, no. 155, entitled “Delegation to the Government for the reform of business crisis and insolvency discipline”, concerning the reform of bankruptcy in Italy with the aim of harmonizing italian discipline with the other EU Member States, has been published on Gazzetta Ufficiale. Here’s the mainly news.
BANKUPTCY LAW REFORM
- The term “Bankruptcy” is replaced with “Judicial Liquidation“, with the provision of a single procedural model to guarantee the celerity of the procedure
- Extension of powers of the official receiver, in his new role of judicial liquidator who will be allowed to promote or pursue certain judicial actions
- Provision of an “Alert System” to prevent pathological situations
- Simplification of the access to preotective measures and further facilitations for better ensure business continuity
- It’s now ensure the possibility for a group to present a single application for approval of restructuring agreements
First of all, the term “bankruptcy” is replaced with “judicial liquidation”. At the same time, the notion of “state of crisis” is introduced, with the specific meaning of probability of a future insolvency. All types of debtor will be subject to the screening procedure, without any distinction between a natural or legal person, a consumer or an entrepreneur. [To check that state, a single procedural model must be used, to guarantee the celerity of the procedure].
It’s one of the most important news of the reform; the aim is to prevent pathological situations, enabling a crisis-settlement board set up in each chamber of commerce to intervene behind request of the debtor or third parties, with the purpose of reaching an agreement between debtor and creditors in a maximum of six months. The debtor, supervisory boards, auditor or the audit firms must promptly notify that board, whenever appear the evidence of a possible state of crisis arising from the business activity. Simultaneously, specific bonus are introduced for entrepreneurs who properly use that institution, as the discharge from bankruptcy crimes if the economic damage will be small, or the recognition of mitigating circumstances and the reduction of interests on tax debts. With the same aim of prevent pathological situations, dimensional standards that obligate societies to institute a supervisory board are reduced. It’s now imperative if a company for two fiscal year have:
- sales over 2 millions or
- more than ten employees or
- active in balance sheet over two millions.
The new institute that will replace the current bankruptcy is inspired by the simplification principle and arrange the extension of powers of the official receiver, in his new role of judicial liquidator who will be allowed to promote or pursue certain judicial actions.
Common system will be applied to liquidate assets, and it’s based on specific elements: the establishment of a unitary telematic market where assets will be sold, the possibility for the creditors to buy those assets and the institution of one or more funds for the management of unsold assets.
RESTRUCTURING AGREEMENTS AND CREDITORS ARRANGEMENT
Access to protective measures and further facilitations is simplified by providing specific institutes to encourage the company’s preventive restructuring in order to better ensure business continuity.
With the same aim, the recourse to the creditors arrangement institute is promote.
It’s now ensure the possibility for a group to present a single application for approval of restructuring agreements, preventive agreement or judicial liquidation, guaranteeing a single procedure for all the companies involved and linked. Procedure will be entrust to a single judge and to a single receiver.
It will be up to the Government issue one or more legislative decrees that will replace the current bankruptcy and other insolvency procedures, in addition to the composition of the over-indebtedness crisis and the system of privileges and guarantees.