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CoViD-19 and new Italian Insolvency Code

As part of the measures aimed at containing the economic and financial consequences of the CoViD-19 pandemic, on April 8th, 2020 the Italian Government enacted the Law Decree No. 23 (the "Decree"), whose Sec. 5 postpones the effective date of the new insolvency code (i.e. Legislative Decree No. 14, dated January 12, 2019, the "Insolvency Code") from August 15th, 2020 to September 1st, 2021.

Consequently, any provisions of the Insolvency Code governing, for example, alert and debt composition procedures (including any new entities involved therein), monitoring tools and procedures, bankruptcy ("liquidazione giudiziale"), groups' insolvency, mandatory liquidation, as well as any crime-related and labour-related provisions, not already effective on April 6th, 2020, will come into force only starting from September 1st, 2021.

The grounds for such postponement (as pointed out in the accompanying report to the Decree) are the followings:

  1. (a)the new alert procedures provided for by the Insolvency Code do not fit the crisis scenario which is affecting the entire world economic system; and

  2. (b)within an economic scenario which might lead to a lack of financial resources to re-structure the enterprises' debts, as well as to re-finance distressed companies, the Insolvency Code would not be able to properly pursue and achieve its main goals; and

  3. (c)enacting a new code, which carries a broad set of new provisions, seems to be not appropriate within a distressed situation in which all economic operators need stability, at least at a regulatory level.

It being understood that any provisions of the Insolvency Code already effective on the entry into force of the Decree (including, for example, the amended version of Sec. 2086 of the Italian Civil Code imposing on the entrepreneur the obligation to establish an adequate organizational structure aimed at promptly preventing the crisis and the loss of business continuity) remain unaffected by the Decree.

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