Italy has recently adopted a comprehensive reform of Insolvency Law, the “Code of Crisis and Insolvency”, which was due to become effective on 1 September 2021. However, the Government with a decree of 24 August 2021 (D.L. 118/2021), considering the ongoing pandemic emergency, postponed the entry into force of the new Code to 16 May 2022.
In the same measure, a completely new procedure has been introduced, designed to facilitate the emergence of crisis situations and resolve them promptly, even without the intervention of the judicial authority: this is the 'Negotiated Crisis Resolution' (Composizione Negoziata della Crisi), which should ensure limited costs, no excessive time and above all relative confidentiality.
A company in difficulty can ask the Chamber of Commerce to appoint an independent expert to assist it in managing the crisis. The expert will first of all assess the existence of a concrete prospect of recovery and, if so, will guide the company in the choice of possible intervention strategies, starting negotiations with creditors. If the expert does not see any prospect of reorganisation or if no suitable solutions are found, the procedure is closed without further consequences.
During the negotiations, the entrepreneur retains the management of the company, but is obliged to inform the expert in advance of certain transactions. Finally, the negotiations may lead to the signing of different possible types of agreements with creditors enabling the crisis to be overcome.
The intervention of the judicial authority is purely optional: the entrepreneur can ask the court, for example, to grant protective measures (prohibition on creditors starting or continuing enforcement or interim measures) or the redetermination of contractual conditions which have become particularly onerous as a result of the pandemic.
It is expected that the new procedure (which is an early implementation of Directive 2019/1023/EU) will enter into force on 15 November 2021. Before that, however, the decree must be approved by Parliament, which may introduce amendments.