Pre-insolvency agreements and debt restructuring agreements are subject to new rules from September 11, 2012 introduced by art. 33 of Law Decree June 22, 2012, n. 83 ( “Decreto crescita – sviluppo”), as converted by Law August 7, 2012, n. 134.
In order to promote and foster negotiated solutions of corporate financial crises thus ensuring business continuity, the main innovations under the new rules include, in particular, the following measures:
- the opportunity for the debtor to request admission to the composition procedure postponing, within the period as specified by the judge, the deposit of the plan of arrangement and related documentation or the application and the documentation relating to the restructuring agreement debt. This allows the debtor to immediately benefit from the protection related to the above mentioned request and precludes creditors from taking individual enforcement or protective actions. In addition, the mentioned law annuls judicial mortgages granted within the 90 days before the registration date of the request in the competent Companies’ Register;
- the opportunity for the debtor during the interim phase (from the filing of the request to its judicial endorsement), to do, independently, ordinary administrative acts and, with the approval of the Court, urgent and extraordinary administrative acts, with the recognition of priority of payment of the debts accrued as a result of such acts;
- the opportunity for the debtor to apply to the Court for authorization to contract loans which have priority of payment, subject to the condition that the professional report concerning the feasibility of the plan, certifies that these loans are necessary to continue the business and therefore are in the best interest of all the creditors;
- the opportunity for the debtor to apply to the Court for authorization to pay claims for goods, services, and supplies incurred before the arrangement, subject to the condition that the above mentioned report states that such payments are necessary to continue the business and therefore are in the best interest of all the creditors;
- express provision of the “arrangement with business continuity”, feasible through a transfer or contribution in kind of the business assets into an existing or new company. Even in this case, the report of the professional must certify that the continuation of business activity is necessary and viable and in the best interest of all the creditors;
- strengthening of the independent professional’s role appointed to certify the feasibility of the plan of arrangement or debt restructuring agreement who, even if appointed by the debtor, has to be completely independent. In this regard, a new bankruptcy crime introduced in art. 236/bis of R.D. 267/42, punishes a professional who espouses false information or fails to mention relevant information in his or her report;
- the opportunity to pay creditors that have not adhered to the debt restructuring agreement within 120 days from the approval and finality of the agreement or within 120 days from the due date of the credit;
- the suspension of any obligation to recapitalize the company during the pendency of the restructure period.