ARRANGEMENT WITH CREDITORS AND RESTRUCTURING AGREEMENTS
In particular, when arrangements with creditors and restructuring agreements have already been approved by Court, the deadlines for performance that elapse between 23 February 2020 and 31 December 2021, are postponed for six months.
Being the elapse of the deadline postponed and not the running of the deadline suspended, the new deadlines shall be in fact determined adding six month to the original date of elapse.
As far as the proceedings for approval by Court of arrangements with creditors and restructuring agreements, the following tools of protection are granted to the debtor:
- Presentation of a new proposal of arrangement with creditors or a new restructuring agreement: under art. 9, paragraph 2, of Decreto Liquidità, in case of proceedings pending as at 23 February 2020, the debtor can bring, until the hearing scheduled for the approval by the Court of the arrangement with creditors or the restructuring agreement, a motion for a deadline, of maximum 90 days, for filing a new proposal of arrangement with creditors or a new restructuring agreement. If the motion is approved by the Court, the deadline granted cannot be postponed any further and the deadline shall be calculated starting from the moment it is granted by decree. The abovementioned motion is inadmissible if it is filed in proceedings for reaching an arrangement with creditors when the creditors’ meeting already took place, but the majority needed for the approval of the arrangement itself was not reached.
- Request a modification of terms of performance of the arrangement with creditors or the ones of the restructuring agreement: under art. 9, paragraph 3, of Decreto Liquidità, until the hearing scheduled for the approval by the Court of the arrangement with creditors or the restructuring agreement, the debtor that wishes to merely amend the deadlines for the performance of the arrangement or the ones of the restructuring agreement, may file a motion indicating the new deadlines requested (that cannot be further than six months after the initial deadline) and the documents to support the motion. Hence, it is of utmost importance that the debtor takes action in order to prove to the Court - and also to the Court-appointed Receiver, in case of arrangements with creditors - the need for an amendment of the performance terms. If the Court finds that the motion of the debtor deserves to be granted, and that the requirements provided by law for arrangement with creditors and for restructuring agreements are met, it approves it, giving explicit indication of the new performance terms.
- Request a postponement for presenting the proposal for arrangement with creditors and for filing the restructuring agreement: art. 9, paragraph 4, of Decreto Liquidità gives to the debtor the possibility to file a motion for obtaining a postponement of maximum 90 days for presenting the proposal for arrangement with creditors and for filing the restructuring agreement if:
- (i) a deadline for presenting the proposal for arrangement with creditors (under art. 161, paragraph 6, Royal Decree No. 267 on 16 March 1942) was already obtained by the debtor on justified grounds;
- (ii) the deadline under point (i) above was already postponed by Court. In the abovementioned motion, the debtor shall indicate - and prove - the new circumstances, determined by COVID-19 epidemic, that justify the need of the postponement.
Hence, it is of utmost importance that the abovementioned circumstances are proved as the Court – upon opinion of the Receiver if appointed, grants the postponement when the motion is based on factual and justified grounds. The motion described above in the present paragraph may also be filed by the debtor that obtained a deadline for filing a restructuring agreement (under art. 182-bis, paragraph 7, Royal Decree No. 267 on 16 March 1942). On such motion, the Court decides in closed session and in a simplified way. In such case, the Court, not only assesses the existence of factual and justified grounds on which the motion is based, but also it assesses whether the conditions for having a restructuring agreement of debts are still met (majorities provided by art. 182-bis, paragraph 1, Royal Decree No. 267 on 16 March 1942, i.e. creditors representing 60% of the credits). Hence, it is of utmost importance that the debtor takes action in order to provide specific elements to support its motion, also with reference to such requirements.
MOTIONS FOR BANKRUPTCY DECLARATION AND INSOLVENCY DECLARATION
Art. 10 of Decreto Liquidità provides for the inadmissibility of the following motions, if filed between 9 March 2020 and 30 June 2020:
- motion for bankruptcy declaration;
- motion for insolvency declaraton prior to compulsory liquidaton;
- motion for insolvency declaration for receivership arrangements for large firms in crisis
The abovementioned inadmissibility is not applied if in the motion filed by the State’s attorney, the application of interim or preservation measures for the protection of the assets or of the firm is claimed under art. 15, paragraph 8, Royal Decree No. 267 on 16 March 1942.
The period of time from 9 March to 30 June 2020 is not included in the calculation of the time limit in which an entrepreneur can go bankrupt after it ceased its business (art. 10 Royal Decree No. 267 on 16 March 1942) nor, if a bankruptcy declaration has occrred, in the calculation of the deadlines related to the proceedings to set a transaction aside by virtue of the debtor’s insolvency (art. 69 bis Royal Decree No. 267 on 16 March 1942).
In fact, the number of days from 9 March to 30 June 2020 shall be excluded in the calculation of the abovementioned time limits with the purpose, which seems the purpose of the law, of striking a balance between the protection of enterprises that are facing the difficulties caused by the current epidemic and the protection of creditors with the insolvency procedures.
BUSINESS CRISIS AND INSOLVENCY CODE
Art. 5 of Decreto Liquidità provides a postponement to 1 September 2021 of the entry into force of the business crisis and insolvency code (Decree 12 January 2019, No. 14).
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