Deciding the parameters of directors' personal liability for actions, or omissions, when a company continues to trade while it is or near insolvent requires a balance to be struck between allowing directors latitude to try to rescue the company and protecting the company's creditors.

In August 2021 the Italian government, led by Mario Draghi, enacted a Law Decree (no. 118) to issue “urgent measures to deal with companies’ and entrepreneurs’ crises and subsequent restructuring and other urgent measures for the justice system.” On October 23, 2021, the Law Decree no. 118 was converted into Law no. 147/2021 (Law 147). The new tools introduced by Law 147 have been put in place to deal with entrepreneurs in crises that need an urgent turnaround, including during the ongoing COVID-19 emergency.

The Supreme Court has recently released a decision on directors' duties, which should serve as a timely reminder to all directors of their duties under the Companies Act in circumstances of insolvency. Continuing to trade while insolvent will be a breach of your duties, even if you believe that overall creditors may be better off or the extent of losses will be reduced. It is however welcome confirmation for liquidators that the Courts will enforce the provisions of the Companies Act based on the clear wording of these sections.