The reform of the insolvency procedures regulations has been definitely approved on October 11th 2017. The issue of the Reform begun with the so-called “Commissione Rordorf”, established with ministerial decree of the Italian ministry of justice on January 28th 2015 and having the task of organically reforming the regulations of insolvency and crisis of entrepreneurs. A first version of the enabling act has been submitted to the Italian Parliament on March 2016 and approved by the Camera dei Deputati on February 3rd 2017. The reform has been transmitted to the Senato della Repubblica that definitely approved it in October.

A twelve-months term from the approval of the reform has been given to the Italian Government to adopt one or more legislative decree to reform the regulation of insolvency proceedings, following the enabling act guidelines.

This reform encourages the prompt appearance of the debtor crisis so that the rescue proceedings could be started immediately. This aim is carried out by creating new procedure of alert and crisis settlement managed by specific crisis composition bodies “Organismi di composizione della crisi”, and also by increasing control powers of the statutory auditors, the internal audit bodies and external auditor, that have the duty to monitor the company’s health and, if necessary, to signal the administrative body about hints of company’s crisis.

It also aims at simplifying the procedural rules, creating one model of proceeding to evaluate the insolvency and/or crisis of the debtor, and that could have different possible outcomes as the Court has the power to choose the insolvency proceeding more appropriate to the case (i.e. preventive composition, winding up, etc.).

The Fallimento proceeding will be named from now onwards as Liquidazione Giudiziale (Judicial Liquidation) and its procedure is simplified, also in order to shorten its duration.

The assessment of debt phase shall be more efficient and its duration reduced, also by the further implementation of electronic means. The regulation of the liquidation of assets should grant the maximum satisfaction of the creditors, making it more transparent and efficient. Also the proceeding closing phase shall be accelerated and the liquidator powers will be increased. The reform also empowers the Liquidazione Giudiziale by the elimination of the cases of special enforcement and special processual privilege, also the on-land ones, in addition to a simplification of the rules about pending contracts.

The regulation of the benefit of discharge will be modified, giving the possibility to the debtor to apply for the benefit from the closing of the proceeding or by three years from its opening and allowing also companies, and not only natural persons, to benefit from it.

The rules regarding Concordato Preventivo proceeding will be amended, restricting the cases in which a winding-up agreement could be filed preferring the continuation of business and modifying other rules of detail – both in the admission and the executive phase – aimed at reinforcing and shortening this type of insolvency proceeding.

Restructuring Agreements (Accordi di Ristrutturazione dei Debiti), Compositions Based on Certified Rescue Plans (Piani Attestati di Risanamento) and Moratorium Agreements (Convenzioni di Moratoria) are encouraged by the Reform that carry favorable provisions. It provides for the elimination or reduction of the limit of the 60% of creditors to be admitted to the Restructuring Agreements proceeding; the assimilation of the Restructuring Agreements regulation with the Concordato Preventivo, with regard to the debtor protection against enforcement actions; the expansion of the art. 182-septies application to agreements with creditors different from Financial Institutions; and finally the Certified Rescue Plans should be in written form, with certain date and detailed content.

The Administrative Winding-Up proceeding should reduce its implementation environment and should apply only if provided for by special law regarding Banks, Financial Intermediary and Insurance Companies.

The reform also regulates the crisis and insolvency of group of companies, introducing – in addition to the definition of group of companies – the possibility to file a single request of admission to Restructuring Agreements, Preventive Composition or Judicial Liquidation for all insolvent companies belonging to the same group, the joint management of the proceeding and specific duties of cooperation and mutual information among companies of the same group.

The reform also modifies the proceedings for Over-Indebted Noncommercial Debtors, introducing procedures aimed at continuing the debtor’s business – also by restructuring debts arise from financing contracts – and allowing the deserving debtor, that is not able to offer any satisfaction to his creditors, to have the benefit of discharge.

Apart from modifying the insolvency regulation, the reform will also affect the Italian Civil Code rules regarding pre-emptions – that should be reorganised and reduced – and also regarding non-possessory securities.

Within one year from the approval of the enabling act, the Italian Government’s decrees should be issued, decrees that will realise the reform outlined by the Italian Parliament as above described.