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Insolvency & Restructuring
Italy
In addition to amendments to the composition procedure, the Decree-Law on Urgent Measures for the Country's Growth introduced new provisions applying to debt restructuring agreements pursuant to Article 182bis of the Insolvency Act, as well as some crossover provisions applicable to both composition with creditors and debt restructuring agreements.
In order to foster economic growth, Parliament has amended the Insolvency Act. The changes are intended to allow businesses in financial difficulties to have faster and simpler access to insolvency procedures by affording them an opportunity to apply for new loans and to rely on legal protection at an early stage in preliminary negotiations with creditors.
New legislation allows a person who is ineligible for bankruptcy proceedings to discharge his or her indebtedness through a procedure that involves all of his or her creditors, even if only some of them participate in the agreement. However, will the benefits to creditors of accepting such a proposal be sufficient to dissuade them from seeking individual enforcement actions?
Before the reform of Italian insolvency law, the mainstream view was that no limitations should be placed on a court's power to test the debtor's compliance with the objective and subjective conditions for admission to the composition procedure. However, a greater emphasis on the private autonomy of the parties has led to new approaches to a judge's review of composition proposals and their accompanying plans.
Bankruptcy is increasingly regarded as a last resort for a struggling company. Changes to the composition procedure promote the parties' shared interest in negotiating a solution to the debtor's difficulties. The result is a legislative framework that is better suited to a commercial environment in which competitiveness, reactivity and flexibility are key requirements.
Recent modifications to the composition procedure under Italian law were intended to give debtors greater latitude in structuring the content and terms of the composition proposal. Although the stages of the procedure are well established, questions still arise as to when, and to what extent, a proposal for composition can be amended.
