Italy’s New (and Amended) Insolvency and Restructuring Code Enters into Force

On July 15, 2022, Italy’s new insolvency and restructuring code (the “Code”) entered into force, replacing large swaths of Italy’s insolvency legislation dating back to 1942.

The Code was first enacted in January 2019 and was meant to enter into force 18 months later. However, this was postponed several times due to the Covid-19 pandemic.

Meanwhile, on June 20, 2019, the European Union adopted Directive 2019/1023 (the “EU Directive”), seeking to harmonize the restructuring and insolvency legislations of Member States, including Italy, which was required to implement it by July 17, 2022.

As a result, on June 15, 2022, the Government adopted a decree (the “Amendment Decree”) amending the Code in order to, among other things, give effect to the EU Directive, and set July 15 as the date of entry into force.

The Code, as amended by the Amendment Decree, entails a major overhaul of Italy’s insolvency and restructuring framework, including by (i) replacing the alert measures envisaged in the original version of the Code with an out-of-court composition tool (composizione negoziata), (ii) substantially reforming the judicial composition with creditors (concordato preventivo), (iii) introducing new restructuring tools (such as the court-ratified restructuring plans), and (iv) reforming the role of shareholders in these proceedings.

Please click here to read the full alert memorandum.

(Republished in the November-December 2022 issue of Pratt’s Journal of Bankruptcy Law.)