Europe has struggled during the last several years to triage a long series of critical blows to the economies of the 28 countries that comprise the European Union, as well as the collective viability of the 19 eurozone economies. Here we provide a snapshot of some recent changes implemented by certain European nations aimed at modernizing their respective insolvency laws to promote rehabilitation of ailing enterprises wherever possible and to level the playing field for stakeholders.
Italian Insolvency Law Reforms
On Aug. 5, 2015, the Italian Parliament approved Italian Law Decree No. 83 of June 27, 2015, as part of the reform process for pre-insolvency proceedings under Italian bankruptcy law (Royal Decree No. 267 of March 16, 1942). The purpose of the reform is to provide distressed Italian entities with a more modern and flexible insolvency law system based on private rather than judicial initiative. The decree introduces measures that are designed to, among other things, (1) give distressed Italian entities greater access to rescue financing; (2) promote the active participation of creditors in pre-insolvency proceedings (e.g., by giving creditors the ability to propose alternative restructuring plans under certain circumstances); (3) empower Italian courts to approve asset sales as part of a restructuring plan by means of competitive bidding; and (4) introduce certain special rules that can be applicable to debt-restructuring agreements entered into by distressed entities with obligations principally to banks and/or financial intermediaries. A more detailed discussion of the decree can be accessed here.
French Insolvency Law Reforms
On Aug. 6, 2015, France adopted legislation designed to promote economic growth, activity and equal opportunity called the “Macron Law,” named after the French Minister of Economy Emmanuel Macron, has implications for various areas of the French economy. It includes measures to expand the workweek to include Sunday, liberalize the transport sector and modify the French insolvency regime. The new legislation completes, among other things, reforms to French insolvency law first undertaken in 2014. With the implementation of these reforms, which include the creation of specialized insolvency courts for large cases and the introduction of rules that permit the "cramdown" of shareholder interests in reorganization proceedings, the new French regime creates a level playing field on which creditors will assume an increasingly greater role in insolvency proceedings. A more detailed discussion of the insolvency law reforms in the Macron Law can be found here.
Amendments to Spain's Insolvency Act and Public Sector Contracts Act
On Oct. 1, 2015, the Public Sector Legal Regime Act (Ley 40/2015, de 1 de Octubre, de Régimen Jurídico del Sector Público) (the "PSLR Act") was passed by the Spanish Parliament. The PSLR Act introduces, among other things, the following reforms to the Spanish Insolvency Act (Ley 22/2003, de 9 de Julio, Concursal) and the Spanish Public Sector Contracts Act (Real Decreto Legislativo 3/2011, de 14 de Noviembre, por el que se aprueba el texto refundido de la Ley de Contratos del Sector Público):
- A clarification of the ranking in insolvency proceedings of debts secured by pledges granted over future credit rights;
- The addition of a provision requiring prior approval by the relevant contracting authority for the granting of pledges over credit rights arising from the liability of the National Institute of Public Administration due to the termination of public concessions (responsabilidad patrimonial de la Administración, or "RPA");
- Certain amendments to the legal regime applicable to the calculation and payment of RPA; and
- The creation of a National Evaluation Office (Oficina Nacional de Evaluación) to analyze the financial sustainability of public works and public-services concessions before such concessions are awarded.
A more detailed discussion of the reforms is available here.