By Alberto Cerini, Expert in Corporate Turnaround & Financial Restructuring
In Italy the current European crisis is having disruptive consequences on companies that, as in many other EU Countries, are now revising their supply chain, incurring many difficulties to reach some markets, and are dealing with unexpected increases in raw materials and utilities. These shocks are further affecting companies already negatively impacted by two years of pandemic from which, among other things, they have emerged, in most cases, not only with much lower levels of turnover and margins, but also with increased levels of debt, caused by the large injection of liquidity that Europe has allowed its Member States to bring to companies, that now, with the end of the moratoriums, they must restart repaying.
In this context, in March 2022, the Council of Ministers approved, at first reading, the Draft Legislative Decree on amendments to the Code of Business Crisis and Insolvency (so-called CCII) referred to in Legislative Decree No. 14 of 12 January 2019, implementing EU Directive 2019/1023 (so-called Insolvency Directive). The Italian legislator is introducing preventive restructuring frameworks as measures and procedures aimed at the reorganisation of the firm by changing the composition of its status or the structure of its assets and liabilities or capital, which allow debtors an early recovery that can prevent insolvency by avoiding the liquidation of healthy firms. The measures should at the same time prevent the loss of jobs as well as knowledge and skills and maximise the total value for creditors, compared to what they would have received in the event of liquidation of the company's assets or in the case of the best possible alternative scenario in the absence of a plan.
The amendments introduced mainly concern: (i) the disappearance of the OCRI and the business crisis indicators referred to in Article 13 of the previous text of the CCII and the replacement of the alert and assisted settlement measures by the negotiated settlement, a procedure that is mainly out of the Court and confidential and which is expected to be largely used by Companies to prevent possible insolvency and restructure their businesses; (ii) the preventive restructuring frameworks; (iii) the exdebitation procedures and disqualifications; (iv) the establishment of the restructuring plan subject to creditors’ approval; and (v) a strong push for a greater and more efficient use of the business continuity arrangement.
Among the most important changes, the Scheme fills what has been described by many as a gap in Article 2086 of the Civil Code, indicating as relevant warning signs for the timely detection of the state of crisis: (i) the existence of payables for wages and salaries overdue for at least thirty days amounting to more than half of the total monthly amount of wages and salaries; (ii) the existence of payables to suppliers overdue for at least ninety days amounting to more than the amount of the payables not overdue (iii) the existence of exposures to banks and other financial intermediaries which are more than sixty days past due or which have exceeded for at least sixty days the limit of credit facilities obtained in any form whatsoever provided that they represent in the aggregate at least five per cent of the total exposures; (iv) the existence of one or more exposures to tax authorities and social security institutions within the thresholds set out in the new Article 25-novies, paragraph 1, of the CCII.
New reporting requirements are also adopted for qualified public creditors – the Italian tax authority, National Social Insurance Agency, National Institute for Insurance Against Industrial Injuries and the Collection Agency - for which a significant reduction (compared to what was initially foreseen in the CCII) of the thresholds of relevance of the values leading to their activation is established.
As evidence of the special attention paid to the issue of employee protection under the Insolvency Directive, an obligation to consult trade unions has been included for employers with more than 15 employees who intend to adopt the measures provided for in a preventive restructuring framework.
Share this page: