On January 10, 2019, the Italian Government enacted a new bankruptcy code which replaces large swaths of Italy’s insolvency legislation dating back to 1942 (though subject to significant amendment in recent years), taking into account the recommendation of the EU Commission of March 12, 2014 on business failure and insolvency, which in turn formed the basis for the draft EU directive on preventive restructuring frameworks currently under discussion.
The Code will entail a major overhaul of Italy’s bankruptcy and restructuring framework, including by (i) introducing alert measures that seek to identify and address distress situations at an early stage, (ii) providing mechanisms designed to facilitate the restructuring of corporate groups, (iii) limiting the use of judicial compositions with creditors (concordato preventivo) to going-concern restructurings (as opposed to liquidations), and (iv) re-defining the requirements of debtor-in-possession financings.