The reorganisation effort of distressed companies often requires new funding. This has led the Italian insolvency system to abandon punitive solutions in favour of incentives for companies in distress. An interesting aspect of this change is represented by the new rules adopted in recent years with regard to financing granted by shareholders of companies in crisis.
Bankruptcy agreements are governed by Articles 124 to 141 of the Bankruptcy Law and aim to speed up bankruptcy proceedings. When a bankruptcy agreement proposal is filed with the bankruptcy court, the delegated judge seeks the receiver's opinion and the approval of the creditors' committee. For a proposal to be approved, it must obtain a favourable vote of a majority of the creditors admitted to vote by Article 127 of the law.
The new civil insolvency proceedings look set to become increasingly important, especially considering their application to the large number of microenterprises and business entities which operate below the thresholds set out in Article 1 of the Bankruptcy Law. The new deed arrangement is a confirmation that the legislature has understood (at last) the economic importance of microenterprises in Italy and the need to regulate their financial difficulties, the impact of which could no longer be ignored.
The recent enactment of Law 155 represents an ideal opportunity to modernise Italian insolvency proceedings through a comprehensive set of guiding principles and criteria to be applied to rationalise the associated judicial proceedings. Key changes include the development of mechanisms to recognise and resolve a debtor's business crisis before it becomes irreversible and the simplification of judicial proceedings, which will be faster and prioritise proceedings that allow business continuity.