Reform of Italian Insolvency Law
Reform of Italian Insolvency Law
On 11 October 2017 the Senate finally approved the Law for the reform of Italian Insolvency Law.
The Government is therefore delegated to enact - within twelve months - the reform in compliance with EU law and the principles set forth by the legislator.
Among the many principles included in the reform law, the following are worth mentioning:
The term “Bankruptcy” (Fallimento) will be replaced by the expression “Judicial Liquidation” (Liquidazione giudiziale) both in civil and in criminal provisions;
The new concept of “crisis situation” will be introduced. This is to be regarded as the possibility of future insolvency and is therefore a different situation from that of insolvency;
The assessment of the crisis - situation and of the insolvency shall in a first phase follow just one procedure for all categories of debtors, being those natural or legal persons, consumers, professionals, entrepreneurs or companies, excluding public entities only. The outcome may be different for the different categories of debtors and may have a liquidation or conservative nature;
For the purposes of territorial jurisdiction, references shall be made to the “center of main interests” of the debtor according to EU law;
In the attempt to ensure the specialization of the judges in insolvency matters, proceedings regarding extraordinary administrations and those of company groups - of relevant dimensions - will be attributed to courts with specialized divisions. At the same time objective criteria will be identified (based among others on the number of proceedings settled during the last five years and on their duration) for the attribution of jurisdiction over insolvency proceedings of companies. Only for consumers, professionals and small sized enterprises the existing jurisdiction criteria will remain in force;
There will be specific provisions for the crisis and the insolvency of company groups thereby taking into consideration the possibility to have one proceeding for companies belonging to the same group. There will also be obligations regarding information and collaboration to apply to management organs in case of separated proceedings including those taking place abroad;
The alert procedure will be activated, aiming at promoting that crisis emerge at an earlier stage. Out-of-court procedures of assisted resolution will be activated with the support of ad hoc bodies that will be established at the Chambers of Commerce.
The composition with creditors will be modified as follows: (i) Only liquidation proposals providing a contribution of external resources - ensuring the payment of at least 20% of the unsecured claims, will be admitted; (ii) Tribunals will be in charge to assess the feasibility of plans also from an economic point of view, (iii) Debtors will be encouraged to submit plans that provide the continuity of business also simultaneously to the liquidation of goods non- functional to the business activity;
There will be measures to simplify and streamline procedures to assess the liabilities of the new “Judicial Liquidation”, including measures to facilitate the electronic submission of requests also by foreign creditors. A limitation to the admissibility of belated petitions will be introduced as well and steps taken to have just one national electronic market for the sales;
The ranking system of creditors will be reorganized with the aim to reduce the cases of general and special liens. In the meantime, a new form of collateral will be introduced i.e. security without dispossession, having as object material and non - material goods, including future ones, determined or determinable, that will be entered into an electronic record.