The most innovative features of the new Insolvency Code include, among others: (i) the introduction of safeguard obligations aimed at detecting corporate distress and promoting the adoption of restructuring tools at an early stage; (ii) a more favourable approach to procedures allowing for business continuation on a going concern basis, as opposed to those leading to liquidation of the company; and (iii) specific provisions concerning the insolvency / restructuring of company groups.

Introduction

Il D.L. 24 agosto 2021 n. 118 (Decreto Crisi d’Impresa) è ora legge: il 23 ottobre 2021 è stata pubblicata in Gazzetta Ufficiale la L. 147/2021 di conversione del D.L.

The conversion into statute on 23 October 2021 of the so-called Business Distress Bill adds new provisions to those recently adopted by the Italian government to address corporate distress following the COVID-19 pandemic, to provide companies with new legal tools to prevent the onset of economic distress or overcome reversible financial instability.

Chapter 11 plans commonly protect a debtor’s key stakeholders that participate in the chapter 11 process from claims arising in connection with the bankruptcy case. The Office of the United States Trustee (the “US Trustee”), the branch of the Department of Justice tasked with monitoring bankruptcy cases, has recently taken aim at limiting the use and scope of these “exculpation” provisions in large restructuring cases across the country.

Background and Standards

Nearly a year ago, the Italian Parliament passed Law 155/2017 giving the Government twelve months to adopt a root and branch reform of the rules governing business distress and insolvency procedures, taking into account European legislation (EU Regulation 2015/848, Commission Recommendation 2014/135) and the principles of the United Nations Commission on International Trade Law.

Significant innovations have been introduced in Italy by Law Decree no. 83 of 27 June 2015 (entitledUrgent Measures on Insolvency, Civil and Procedural Matters and the Organization and Functioning of Judicial Commissioners (the "Decree").The Decree was converted by the Italian Parliament into statutory law no.132 enacted 6 August 2015 (the "Conversion Law").