With Law No. 132 of 6 August 2015 Italy’s parliament finally passed (with some amendments) Law Decree No. 83 of 27 June 2015 (as finally converted into law, the “Decree”), amending various provisions of Royal Decree No. 267 16 March 1942 (the “Bankruptcy Act”), the civil code and the code of civil procedure, and certain tax provisions. The amendments aim to facilitate debt restructurings, support distressed companies in their turnaround attempts, and foster quicker liquidations in bankruptcy proceedings.

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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).

New rules for the competitive bid process aimed at the sale of the debtor’s assets in each phase or type of concordato preventivo procedure, which can now take place even before the confirmation order of the Court.

Competitive sale of debtor’s assets

The Italian Government further integrated the rules applicable to debt restructuring agreements, allowing the debtor to cram down the agreement also to dissenting minority lenders, in two different frameworks: a) stand-still agreements for a “temporary moratorium” pending negotiations, and b) the actual agreements for the rescheduling and restructuring of the outstanding debt.

The Court Monza decided upon a petition filed by the managing director of a company, after confirmation of a “concordato preventivo con continuità  aziendale”  proposal, seeking an authorization to perform certain acts not in the ordinary course of business.

The case

On 23 June 2015, the Italian Cabinet approved Law Decree No. 83 which amends Royal Decree No. 267 16 March 1942 (the “Bankruptcy Act”), the civil code and the code of civil procedure, and certain tax provisions (the “Decree”). The amendments aim to facilitate debt restructurings, support distressed companies in their turnaround attempts, and foster quicker liquidations in bankruptcy proceedings.

Interim Financing

On June 27, 2015, the Italian government approved Law Decree No. 83/2015 (the “Decree”) with the aim of further improving the competitiveness of Italian bankruptcy legislation and facilitating debt restructuring of Italian companies.

The Decree entered into force on June 27, 2015 and needs to be converted into law by the Italian Parliament within 60 days of such date.

New rules on restructuring procedures

Important changes to Italian bankruptcy law with particular respect to the composition with creditors (concordato preventivo) and restructuring agreements (accordi di ristrutturazione) have entered into force on 27 June 2015.

Art. 57 para. 6-bis TUF (introduced by Legislative Decree No. 42/2012) provides for a special procedure of judicial liquidation of investment funds in an insolvency situation, where debts cannot be satisfied in full out of the fund’s assets, but does not state whether investment funds are eligible for concordato preventivo as an alternative to liquidation.

The issues