After a postponement of almost two years from the date originally planned (August 15, 2020) for its entry into force – mainly caused by the crisis caused by the pandemic emergency – on July 15, 2022, the Crisis and business insolvency (or “CCII“) set out in Legislative Decree 14/2019, as last amended by Legislative Decree No. 83 of June 17, 2022, containing a final series of important changes and innovations, has finally entered into force.
Legislative Decree no. 83/2022 was also the opportunity to transpose European Directive 2019/1023 (known as “Insolvency Directive“) in order to allow an alignment of the CCII with the changes introduced during the implementation of this European directive aimed at introducing, within the European Union, a core of common rules and principles in terms of business crisis , capable of making the different national systems more homogeneous and of contributing to the strengthening of the common European space from the point of view of the economic resilience of the common market.
The rules contained in the CCII will only apply to procedures introduced after its entry into force, while for those already pending or, in any case, resulting from a procedure already pending on July 15, 2022, the previous regulations will remain applicable. .
The main innovations of the CCII are as follows:
- further reinforces the need adopt appropriate organizational procedures and tools of the company with the aim of intercepting the state of crisis in a timely manner (which the CCII defines as “the state of the debtor which makes insolvency probable and manifests itself in the insufficiency of expected cash flows to meet obligations over the next 12 months“);
- with the new article 3 CCII, requires the contractor to take functional measures to detect the state of crisis in a timely manner way through appropriate organizational, administrative and accounting procedures in accordance with article 2086 of the Italian Civil Codein order to take the necessary measures to deal with it without delay;
- to reinforce internal control systems, orienting them towards welcoming economic and financial difficulties before they lead to a state of full-fledged insolvency, and sets out the minimum content of crisis indicators: (i) the existence of wage debts, due from at least thirty days amounting to more than half of the total amount of the monthly payroll; (ii) the existence of debts to suppliers that are at least ninety days past due, the amount of which exceeds the amount of debts not yet due; (iii) the existence of exposures to banks and other financial intermediaries, which are more than sixty days past due or have exceeded, for at least sixty days, the limit of credit facilities obtained in any form either, provided that they represent at least a total of five percent of the exposures; (iv) the existence of one or more debt exposures, provided for in Article 25 newparagraph 1;
- provides specific reporting requirements for so-called public creditors (Agenzia delle Entrate, INPS and INAIL) and banks when there are certain ” warning indicators” or amendments to the credit facilities;
- the role of financial intermediaries, who are now required by law to actively participate in negotiations”actively and informed“, is specified;
- incorporates the discipline of negotiated settlement, i.e. the new procedure aimed at early disclosure of the crisis, which had already been introduced by Decree-Law No. 118 of 24 August 2021 and entered into force before the CCII. Legislative Decree no. 83/2022 included discipline in Title II of the Code, replacing the settlement assistance and alert instruments that provided for reporting to the OCRI (Organismo di gestione delle crisi di impresa);
- introduces a new definition of “crisis and insolvency management instruments” in which it includes, in addition to those traditionally known, the moratorium agreement, the restructuring plan subject to approval (that is, an instrument to be considered halfway between the restructuring agreements and the concordat with creditors), recovery plans, debt restructuring agreements, and concordat with creditors;
- provides a new discipline regarding protective measures for the duration of a crisis settlement instrument, the duration of which may in no case exceed 12 months;
- replaces the term “bankruptcy“with the term”judicial liquidation“, while retaining the already well-known characteristics of the bankruptcy procedure;
- with particular reference to settlement with creditors, among the main innovations, it introduces, if it is a business continuity plan, the express admission also of the indirect form by transfer to a third party and the possibility of derogation from the rule of absolute priority , in favor of the more flexible relative form priority rule; in the event of a liquidation arrangement with creditors, which is generally not encouraged, it provides for the need for an external contribution of up to 10% of the available assets; to items 25 sexy and 25 septies it provides for a simplified composition with the creditors, accessible only at the end of the negotiated settlement procedure;
- provides a unified procedure in which all requests for access to judicial liquidation or to crisis and insolvency settlement instruments are brought together, the latter being treated as a priority when their suitability for creditors is expressly indicated;
- regulates the crisis or insolvency of the “group”that is, a group of companies subject to management and coordination by the same entity.
In short, the Business Crisis and Insolvency Code that has just entered into force represents an instrument by which the Italian legislator wanted to transpose the crisis as a physiological phenomenon in the life of a business. The main idea of the new Code is to prevent insolvency and to allow an early diagnosis of the state of difficulty of companies through the introduction of a series of guarantees, in order to avoid that the delay in the perception of the signs crisis in a company does not lead to a state of irreversible crisis.