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).

Continue Reading Business Restructuring and Insolvency in Italy – a revolution in the making?

Astaldi, the Italian multinational construction company, filed on Friday (28 September) for concordato in bianco. This is an in-court restructuring proceeding under the Italian Bankruptcy Law, which imposes a standstill period for up to six months. Astaldi’s reference to certain provisions in the Bankruptcy Law indicates that it intends to use the standstill period to prepare for a concordato preventivo filing. Astaldi again delayed publication of its 30 June 2018 financial report, and said that it would voluntarily migrate from the “Star” segment of the Borsa Italiana to the general MTA segment. The full text of the announcement is available here.

Astaldi’s €620m RCF matures in 2019, and its €750m bonds mature in 2020. Astaldi had previously announced a €300m capital raise plan, conditioned on the sale of its stake in the Third Bosphorus Bridge. This plan stalled after the sale was delayed amidst the recent economic uncertainty in Turkey. Astaldi announced that its new preliminary restructuring proposal contemplates a lease of its business units to two new Astaldi SPVs, new super senior funding and a capital raise.

In this report, we will discuss:

  • Key takeaways for bondholders;
  • Concordato in bianco; and
  • Concordato preventivo.

Continue Reading Astaldi files for concordato in bianco

Another step towards a lender-friendly environment, but the new form of pledge is being delayed

The Italian Parliament passed law No. 155 of 19 October 2017 to delegate the Government to reform the rules on insolvency and financial distress. This has been commented widely in the press and between commentantors, as it is expected to bring about significant developments (we have previously reported here).

What has received less attention, is that the law also mandates Government to reorganise the system of legal priorities (privilegi), i.e. the rights of preference set out at law for given claims to have preference over other creditors. Further, the delegation includes the authority to introduce a form of non-possessory security over moveable assets. Continue Reading Italy to revamp the system of legal priorities, and introduce non-possessory security

On 9 March 2017, Hogan Lovells hosted a panel discussion looking at the opportunities and challenges involved in direct lending in Italy. The speakers included experts with knowledge of the Italian market, who put forward their thoughts and shared their own recent practical experiences of doing deals in Italy.  This article – Direct lending in Italy – provides a summary of what was discussed in the session as well as some further background on the market.

 

Significant innovations have been introduced in Italy by Law Decree no. 83 of 27 June 2015 (entitled Urgent Measures on Insolvency, Civil and Procedural Matters and the Organization and Functioning of Judicial Commissioners (the “Decree”).
The recently enacted provisions are the result of engagement between various institutions and organisations, with the noteworthy contribution of Ernesto Apuzzo, the partner leading the Business Restructuring and Insolvency practice at Hogan Lovells, who participated in the work of the organizing committee coordinated by the Italian Ministry of Economy for devising the several elements of the reform.  Continue reading