Nearly a year ago, the Italian Parliament passed Law 155/2017 giving the Government twelve months to adopt a root and branch reform of the rules governing business distress and insolvency procedures, taking into account European legislation (EU Regulation 2015/848, Commission Recommendation 2014/135) and the principles of the United Nations Commission on International Trade Law. On 11 October 2018 the Italian Government issued the long-awaited draft of the legislative decree establishing the new Code for Distress and Insolvency (Codice della crisi d’impresa e dell’insovenza, the “New Code“).
The demise of insolvency?
At the heart of the New Code is the concept that the notion of “bankruptcy” (fallimento) is a thing of the past, to be replaced by “judicial liquidation” (liquidazione giudiziale), which becomes the last resort, available only when the debtor has failed to propose any other suitable solution. Seeking to ensure the best interest and satisfaction of creditors, the New Code prioritises procedures aimed at overcoming the crisis by keeping the business as a going concern (even if under new ownership).