Urgent measures regarding corporate crisis – Law Decree no. 118/2021

Prepared by Cristian Sgaramella, Michele Giuliani and Emilia Messina

Law Decree No. 118 containing “urgent measures regarding corporate crisis and restructuring, and other urgent measures about justice” was published in the Official Journal on August 24, 2021 (the “Decree”).

With such a provision, the Lawmaker aims, among other things, at supporting companies in containing and overcoming the effects of the economic crisis caused by the COVID-19 pandemic, both through new instruments finalized at identifying alternative solutions for corporate restructuring or recovery and by intervening on existing institutions to facilitate access to procedures other than bankruptcy.

Below, limited to issues related to corporate crisis, a brief summary of the main innovations of the Decree.


Art. 1, Decree, provides in lett. a) for the postponement to May 16, 2022 of the entry into force of the Corporate Crisis and Insolvency Code (Legislative Decree no. 14/2019), and in letter b) for the deferral to 31 December 2023 of the entry into force of the early warning tool and crisis settlement procedures, governed by Title II, Part One, of the same Code of Corporate Crisis and Insolvency.

Negotiated settlement for the solution of the corporate crisis

Articles 2 and following, Decree, concern the new procedure of “negotiated settlement for the solution of the corporate crisis”, an instrument aimed at recovering of companies in difficulty that will enter into force from November 15, 2021.

In particular, the commercial and agricultural entrepreneur in conditions of balance sheet or economic-financial deficit suitable to fear the risk of crisis or insolvency for which, however, it is reasonably possible to pursue the restructuring of the company, may ask the Secretary General of the Chamber of Commerce with territorial jurisdiction, to appoint an expert having the task of facilitating negotiations with creditors in order to identify a solution useful for the recovery of the company (art. 2).

The expert, working alongside the entrepreneur, shall have specific training, as well as independence requirements, as provided for art. 4, Decree, and will be appointed by a commission established before the Chamber of Commerce. His remuneration will vary from a minimum of € 4,000 to a maximum of € 400,000 and will be calculated considering to the assets of the debtor company (art. 16). 

In order to have access to the negotiated settlement, the entrepreneur shall submit a request for appointing the expert via a national telematic platform accessible by the website of the Chamber of Commerce (set up pursuant to art. 3), accompanied by:

  1. the financial statements of the last three years, if not already filed and, for those entrepreneurs not required to draw up financial statements, the tax and VAT returns of the last three years, in addition to an updated (not older than 60 days before) balance sheet and financial position;
  2. a clear and concise report on the actual activity carried out containing a financial plan for the six months and the industrial initiatives that will be adopt;
  3. a list of creditors, with the respective claims due and falling due, as well as real and personal rights of guarantee;
  4. a declaration on the pending appeals for the declaration of bankruptcy or for the assessment of the state of insolvency;
  5. a certificate of tax debts;
  6. the overall debt situation requested from the Italian Revenue Agency;
  7. an extract of the information present in the Centrale Rischi, not older than three months;
  8. a certificate of contributory debts (art. 5).

The expert, appointed within 5 days of the presentation of the request, once accepted, will assess the existence of an adequate solution to overcome the crisis with the parties involved in the restructuring. Should the prospects be concrete, the expert will indicate possible strategies; otherwise, he will ask the application for negotiated settlement to be filed (art. 5).

With access to negotiated settlement, the entrepreneur:

  • may request the application of protective measures of assets aimed at inhibiting the continuation or activation of executive and precautionary actions by creditors (articles 6 and 7);
  • may benefit from the suspension of recapitalization obligations and of the reasons for dissolution envisaged in the event of a reduction in share capital or losses (art. 8);
  • will maintain the ordinary and extraordinary management of the company, with the obligation to inform the expert in advance and in writing of the acts of extraordinary administration and the execution of payments that are not consistent with the negotiations or recovery prospects. The expert may not oppose the carrying out of such acts, but if he considers them prejudicial to the negotiations, to the creditors or to the prospects of recovery, he will notify in writing the entrepreneur and the control body. If, in spite of the report, the act is carried out, the entrepreneur will communicate this to the expert, who will be able to register his dissent in the Chamber of Commerce; if the prejudice is caused to creditors, registration will be obligatory (art. 9);
  • may be authorized by the Court to contract new financing and to redetermine, in good faith, the content of agreements for continuous, periodic or deferred execution if performance has become excessively onerous as a result of the pandemic (art. 10);
  • will have access to tax incentives relating to penalties, interest and deferments (art. 14).

The negotiations may alternatively be concluded with a agreement, with a moratorium agreement, or with a recovery plan which, if also signed by the expert, will not require the professional’s certification.

Alternatively, the entrepreneur may:

  1. ask the Court to approve a debt restructuring agreement with a reduction in the eligibility percentage to 60% if the agreement is reflected in the final report;
  2. prepare a certified recovery plan;
  3.  propose an application for access to a simplified arrangement for the liquidation of assets, pursuant to art. 18 of the Decree;
  4. access to one of the procedures governed by Royal Decree no. 267 of 1942, Legislative Decree no. 270 of July 8, 1999, or Legislative Decree no. 347 of December 23, 2003, converted, with amendments, by Law no. 39 of February 18, 2004 (art. 11).

The conclusion of the negotiations will entail (i) the preservation of the effects of the act authorized by the Court even if the negotiated settlement leads to one of the procedures envisaged by the Bankruptcy Law and (ii) the inexistence of the revocatory action pursuant to art. 67, paragraph 2, Bankruptcy Law, for all payments, deeds and guarantees made by the entrepreneur following the acceptance of the assignment by the expert, unless the latter has issued a negative opinion on the same (art. 12).

The Decree also regulates the access to the negotiated settlement by groups of companies pursuant to art. 13, Decree, and by sub-threshold companies (as per art. 1, paragraph 2, Bankruptcy Law), in accordance with art. 17, Decree.

Simplified arrangement for the liquidation of assets

Articles 18 and 19, Decree, regulate a new form of simplified arrangement with liquidation purposes to be requested only in the event of impossibility, certified by the report submitted by the expert at the end of the negotiated settlement attempt, of finding a suitable solution to overcome the crisis.

In this case, the entrepreneur may submit, within 60 days of the issue of the report, a proposal for an arrangement with assignment of assets together with the liquidation plan, asking for the approval of the arrangement.

The Court, having assessed the validity of the proposal, having acquired the final report and the expert’s opinion with specific reference to the presumable results of the liquidation and the guarantees offered, will appoint an auxiliary, in place of a commissioner.

Then, the Court, by decree, will order that the proposal, together with the opinion of the auxiliary and the final report of the professional, be communicated by the debtor to the creditors appearing on the list deposited by the entrepreneur at the time of the application for access to the negotiated settlement. The creditors, unlike the ordinary discipline, will not have any decision-making power within the simplified arrangement.

Finally, the Court will approve the agreement if, having verified the regularity of the procedure, as well as compliance with the order of the causes of pre-emption and the feasibility of the liquidation plan, it finds that the proposal is not prejudicial to the creditors with respect to the alternative of bankruptcy liquidation and, in any case, is useful to each creditor.

Complaint against the approval decree may be filed, within 30 days, before the Court of Appeal, and against the latter’s decree a complaint may be introduced before the Supreme Court.

The relevant provisions of the Bankruptcy Law will apply to the liquidation of the assets, insofar as they are compatible.

If the liquidation plan includes an offer by an identified party to transfer either the company or one or more company branches or specific assets to the same party, even before approval, the liquidator, having verified the absence of better solutions on the market, will execute the proposal and articles 2919-2929 of the Civil Code will be applied to the purchase.

If the liquidation plan provides that the offer shall be accepted earlier than the approval, the auxiliary, having verified the absence of preferable solutions on the market, will execute it subject to the authorization of the Court.

Amendments to Bankruptcy Law

Eventually, it should be noted that articles 20 and following of the Decree concern the amendments to the Bankruptcy Law and, more specifically, to the debt restructuring agreements and the arrangement with creditors.

Major changes include:

  • the approval procedure also in the absence of adhesion by the tax authorities or the provident societies or charities. The latter parties are now granted a period of 90 days from the date of submission of the proposal to submit their possible consent;
  • the extension of the agreements also to non-adhering creditors who belong to the same category, taking into account the homogeneity of their legal position and economic interests, at the occurrence of specific conditions regulated by the Decree;
  • the need to obtain a new certificate from the professional as well as the renewal of the expressions of consent by the creditors participating in the agreements, should substantial changes be made to the plan prior to its approval;
  • if certain requirements are met, the extension of the effects of the moratorium agreement also to non-adhering creditors who belong to the same category;
  • extension to December 31, 2022 for the filing of the waiver of the arrangement with creditors or the debt restructuring agreement, for entrepreneurs who have prepared a recovery plan pursuant to art. 67, paragraph III, letter d) of the Bankruptcy Law; 
  • the non-prosecution, until December 31, 2021, of appeals for resolution of the arrangement with creditors and appeals for the declaration of bankruptcy brought against entrepreneurs who have applied for an arrangement with creditors pursuant to art. 186 bis of the Bankruptcy Law.

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Cristian Sgaramella

PwC TLS Avvocati e Commercialisti


Michele Giuliani

PwC TLS Avvocati e Commercialisti