In Short

The Situation: The Italian Parliament recently approved the Conversion Law of Decree no. 50, dealing with, among others, securitization regulations.

The Result: The Conversion Law expands the scope of the "Law 130 Vehicle" for the sale of certain securitized assets due to an insolvency or restructuring.

Looking Ahead: The new provisions should attract new investment and make it easier for banks and other financial intermediaries to dispose of nonperforming leases and other claims.

During the last two years, the Italian government has focused on reforming the Italian lending market, with the aim of boosting access to financing for Italian businesses and improving bankruptcy and enforcement proceedings in Italy. As part of this reform process, the Italian Council of Ministers enacted Decree No.

Debt exchanges have long been utilized by distressed companies to address liquidity concerns and to take advantage of beneficial market conditions. A company saddled with burdensome debt obligations, for example, may seek to exchange existing notes for new notes with the same outstanding principal but with borrower-favorable terms, like delayed payment or extended maturation dates (a "Face Value Exchange"). Or the company might seek to exchange existing notes for new notes with a lower face amount, motivated by discounted trading values for the existing notes (a "Fair Value Exchange").

One of the primary fights underlying assumption of an unexpired lease or executory contract has long been over whether any debtor breaches under the agreement are “curable.” Before the 2005 amendments to the Bankruptcy Code, courts were split over whether historic nonmonetary breaches (such as a failure to maintain cash reserves or prescribed hours of operation) undermined a debtor’s ability to assume the lease or contract.