Key changes to composition and debt restructuring
The Insolvency Act (267/1942) sets out two procedures for resolving a company's financial difficulties by private arrangement: composition and a debt restructuring agreement.
Composition is a judicial tool, set out in Article 160 of the act, whereby an insolvent company which can still pay part of its total debt submits a scheme of arrangement to its creditors with a view to avoiding a declaration of bankruptcy.
A debt restructuring agreement, provided for by Article 182(2) of the act, is an out-of-court procedure whereby the insolvent company may enter into an agreement with creditors representing at least 60% of its total debt. The agreement allows the company to restructure its financial position and continue its operations.
The Public Finance Amendment Act (122/2010), which enacted Legislative Decree 78/2010, has introduced new measures for businesses in crisis and significantly amended the Insolvency Act in relation to composition and debt restructuring agreements