The reform of the Italian insolvency law: The new business crisis and insolvency bill

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published on January 31, 2019 | reading time approx. 2 minutes

 

On January 10, 2019 the Italian Council of Ministers passed the Business Crisis and Insolvency Bill (Codice della crisi d'impresa e dell'insolvenza), implementing the delegation law no. 155 as of 19 October 2017.

 

 

The new Bill aims at a comprehensive reform of the Italian insolvency law, in particular (i) to allow early awareness of financial distress of a business and (ii) to safeguard the business' entrepreneurial potential during a crisis.

 

Among the most important changes are the following:
  • replacement of the term insolvency with the expression “judicial liquidation” (liquidazione giudiziale) similar to other European countries, like France or Spain, in order to avoid the personal discredit which has historically been caused by the word “bankrupt”;
  • introduction of a definition of “state of crisis” (stato di crisi), being referred to as the likelihood of future insolvency, and of “center of main interest” (COMI), corresponding to the definition of the current EU Regulation;
  • implementation of alert mechanisms to provide for prompt identification of a situation of distress; companies are encouraged to introduce adequate measures in order to cope with the crisis in a timely manner;
  • prioritization of solutions that allow the crisis to be overcome with business continuity;
  • simplification of all the various procedures regulated by the Italian insolvency law;
  • reduction of the cost and the length of insolvency procedures;
  • creation of a register under the authority of the Ministry of Justice, enrolling people and firms with the necessary expertise and requirements which, on appointment by the court, will be in charge of management and control tasks within the procedures regulated by the Italian insolvency law;
  • harmonisation of the procedures with employment safeguarding schemes;
  • introduction of changes to the Italian Civil Code and, in particular, the lowering of the threshold for the appointment of the statutory auditor(s);
  • introduction of rules in group insolvencies.

 

The new Bill will be applicable 18 months after its publication in the Official Journal of the Italian Republic (Gazzetta Ufficiale della Repubblica), with some minor exceptions (among others the lowering of the threshold for the appointment of the statutory auditor(s)), which will enter into force on the thirtieth day following the publication of the decree in the Official Journal. Such publication is expected to occur at the latest by 24 February 2019.

 

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