Newsletter Abbatescianni November 2017

~ LEGISLATION ~

Enabling Act for reforming the legal framework of insolvency and company crisis

With Senate's resolution of 11 October 2017, the Parliament has formally given mandate to the Government for a comprehensive reform on the subjects of bankruptcy and company crisis, scheduling the issuance of one or more legislative decrees throughout the next 12 months.

First among the guidelines provided to the Government for the reshaping and re-organisation of the subject is the mandate to proceed to a lexical revision implying the phasing out of the term "bakruptcy" (fallimento) in favour of "judicial liquidation" (liquidazione giudiziale), as well as the adoption of a clear-cut distinction between the definitions insolvency and company crisis.

Second to follow is the unification of the iter for acceding to the procedures applicable to the company crisis, which will differentiate only at a later stage.

Among the objectives that the Government will have to pursue, there is also the simplification of the procedure, which will take place through the adoption of a unique procedural model, substantially shaped on that already employed for bankruptcy declarations, with the jurisdiction belonging to the court of the place where the debtor entertains his key interests.

The enabling act also provides for a deeper specialisation of the judiciary that will be involved in company crisis procedures, as well as the creation of a register for professionals to be entrusted with managing and supervisory tasks in the context of bankruptcy procedures, who will have to comply with specific requirements concerning their integrity, independence and professional experience to be eligible.

The enabling act dedicates particular attention to company groups, underlining the necessity to introduce provisions that facilitate the unitary management of the crisis.

What points in the direction of a different approach towards the management of insolvency and company crises is also the introduction of benefits for those who employ these mechanisms at an early stage of the crisis.

To this end, the act provides for the creation of a body that will support the debtor in the attempt to overcome the crisis, by involving the creditors in the outline of a recovery plan, and which may as well involve qualified public creditors and the public prosecutor in case no solution is at hand.

Supervisory functions will be borne by the competent company bodies, as well as by the qualified...