Persisting political and economic uncertainty means awareness of market changes remains crucial.

The 2008 distress cycle triggered defaults and restructurings for European PE portfolio companies, as maintenance covenant defaults and balance sheet deleveraging forced refinancings and debt-for-equity swaps. While restructuring conditions for PE firms are stronger in 2019 than they were in 2008, persisting political and economic uncertainty means that awareness of market developments remains important.

The so called “Banks Decree” Decree (Law Decree no. 59/2016, hereinafter the “Decree”), published on the Official Gazette and converted into Law no. 199/2016, has recently entered into force.

The main purpose of the Decree is to grant a partial reimbursement to investors of few local banks that were resolved in November 2015. However, the Decree has also introduced additional innovations which represent a further significant step in the Government’s effort of streamlining the credit recovery activities and implementing a more creditor-friendly environment.

In light of the UK’s cram down and director-friendly processes, in particular its scheme of arrangement model, major European economies such as France, Germany and Italy have worked hard to develop regimes that give greater emphasis to pre-insolvency alternatives. These new regimes create cram down mechanisms and encourage debtor-in-possession (DIP) financings, ultimately aiming to make restructuring plans more accessible, more efficient, and crucially more reliable; essentially more in tune with the Anglo-American approach to insolvency and restructuring.

Material changes to the Italian bankruptcy law will likely result in increased interest of investors in the distressed market.

The Italian legislators passed significant amendments to the legal framework applicable to debt restructurings and bankruptcy proceedings with law decree No. 82/2015, subsequently converted, with amendments, in law No. 192/2015 (Law 192).

Italian bankruptcy law — Royal Decree No. 267 of 16 March 1942 — (the Bankruptcy Law) underwent a substantial reform between 2005 and 20091, mainly aimed at introducing (i) a more efficient regulation of the pre-bankruptcy agreement procedure (concordato preventivo)2 and (ii) new pre-bankruptcy schemes of arrangements, in the form of the out-of-court debt restructuring plan (piano attestato di risanamento)3 and the debt restructuring agreement (accordo di ristrutturazione dei debiti)4.