8 December 2020 - in the context of the COVID-19 emergency legislation, with law 27 November 2020, No. 159, converting into law the law decree 7 October 2020, No. 125 (the "New Provisions") the Government has accelerated the approval of some of the provisions included in the New Bankruptcy Code (whose full enactment is expected in September 2021, please see our previous client alert The (provisional) adoption of the new Italian bankruptcy code: an ongoing process) with the aim of facilitating the approval of restructuring schemes (concordato preventivo or accordo di ristrutturazione dei debiti under Article 182-bis of the Italian bankruptcy act) involving Tax Authority and/or Social Security Institutions ("Public Creditors").
Quite commonly, delays in the Public Creditors' decision-making process block and affect the success of restructuring schemes, particularly when their approval is necessary to reach the relevant majority in the concordato preventivo or the 60% threshold in the accordo di ristrutturazione dei debiti.
The New Provisions are aimed at preventing such delays by introducing a deemed consent mechanism through which the approval by the Public Creditor is deemed to be granted, provided that:
- the independent expert appointed to verify the feasibility of the restructuring plan certifies that the recovery for the Public Creditor in the restructuring scenario is higher than what they would receive in a bankruptcy liquidation scenario; and
- the Court confirms the expert's evaluation.
If such conditions are met, the Court may approve (omologa) the concordato preventivo or the accordi di ristrutturazione dei debiti despite the Public Creditors' failure to consent.
The New Provisions also apply to claims of Social Security Institutions relating to mandatory social contributions.
The New Provisions are definitely a significant step forward in supporting restructuring proceedings in Italy, by making it easier to obtain approval for any schemes that entail (and require) the participation of a Public Creditor.
The New Provisions have been published in the Italian Official Gazette of 3 December 2020 n. 300 and are effective from 4 December 2020.
1. The New Provisions repealed paragraph 6 of Article 32 of the law decree 29 November 2008, No. 185, converted into law 28 January 2009, No. 2, which gave rise in the past to certain restrictive interpretations concerning the possibility for Social Security Institutions to accept restructuring schemes relating to mandatory social contributions.
