The New Italian Corporate Crisis and Insolvency Code is not yet ready to come out of the drawer 6 August 2021 – Posted in: News – Tags: , , ,

It is now confirmed that the new Business Crisis and Insolvency Code, contained in Legislative Decree No. 14/2019, will not enter into force on 1 September 2021.

The Code should have already become part of our positive law, as it was intended to enter into force eighteen months after its publication in the Official Gazette on 14 February 2019.

However, the serious epidemiological emergency caused by the spread of Covid-19, together with the particular sensitivity of the matter governed by the Code, had induced the legislator – when promulgating the so-called “Decreto Liquidità” (cf. art. 5 of Law Decree no. 23/2020, converted with amendments into Law no. 40/2020) – to postpone its entry into force to 1 September 2021.

As this date approaches, it has become clear that the entry into force of the Code will have to be postponed again to 2022. The adoption of a new delaying measure by the Government or Parliament is expected in the coming days.

The new Code is an ambitious regulatory project, designed to definitively overcome the Royal Decree No. 267 of 16 March 1942, which, in the long decades since its enactment, has undergone several reforms which, although motivated by the laudable need to smooth the original approach oriented to the compulsory liquidation of companies in crisis, now make it an instrument not easy to read even for professionals.

In particular, the new Business Crisis and Insolvency Code aims to support the attempts of companies in difficulty to remain operational on the market, avoiding bankruptcy.

The damaging outcome of the crisis, in fact, emerges significantly just by examining the statistical data published by the II Commission of Justice of the Italian Chamber of Deputies in relation tto the use in recent years of bankruptcy or para-bankruptcy procedures (data available at the following link

The time that has elapsed since the issuance of the Code has meant that it has already undergone (by way of Legislative Decree No. 147/2020) some amendments and additions, while – as will be discussed below – some provisions contained both in the Code and in the aforementioned corrective decree have already entered into force in advance.

And the amendments already made to the Code will not even be the last ones since, in the meantime, the European Parliament and the Council issued, on 20 June 2019, Directive (EU) No. 2019/1023, ocontaining the new EU legislation on preventive restructuring frameworks, on discharge of debt and disqualifications. This Directive was published in the Official Gazette of the European Union no. L 172 of 26 June 2019 and must be transposed by Italy, following the extension obtained, by 17 July 2022. It therefore seems likely that the Code will be the natural place where the provisions contained in the Directive will be transposed, with the main purpose of harmonising domestic legislation and the new EU legislation.

If the scenario described above is already complex in itself, it must also be considered that some specific provisions of the Code have, as mentioned above, already entered into force, also making amendments to the Civil Code. Among these, it seems useful to mention the main ones listed below:

  • in Article 2086 of the Civil Code was introduced the obligation for the entrepreneur operating in a corporate or collective form to set up an organisational, administrative and accounting structure appropriate to the nature and dimensions of the business, in order to allow a timely detection of the company’s crisis and the loss of business continuity, as well as to take prompt action in this regard. This obligation has been transposed also into the provisions on corporate management contained in Articles 2557, 2380-bis, 209-novies and 2475 of the Civil Code;
  • in Article 2476 of the Civil Code it has been provided that the directors shall be liable to the company’s creditors for non-compliance with the obligations relating to the preservation of the integrity of the company’s assets. Such action may be filed by creditors when the company’s assets are insufficient to satisfy their claims and, if the company waives the action, it may still be brought by the company’s creditors;
  • in Article 2486 of the Civil Code, it has been provided that, in the event that the directors are deemed to be liable pursuant to the same article, the indemnifiable damage is presumed to be equal to the difference between the net assets at the date on which the director ceased to hold office (or, in the event of the opening of insolvency proceedings, at the date of the opening of such proceedings) and the net assets determined at the date on which a cause of dissolution of the company occurred, less the costs incurred and to be incurred, on a normal basis, after the occurrence of the cause of dissolution and until the completion of the liquidation. The article adds that if insolvency proceedings have been opened and accounting records are missing or if due to the irregularity of the records or for other reasons the net assets cannot be determined, the damages shall be liquidated to the extent of the difference between the assets and liabilities ascertained in the proceedings;
  • Article 2477 of the Civil Code sets out the criteria under which the company is obliged to appoint the supervisory body or auditor, e. when it:
    1. is required to prepare consolidated financial statements;
    2. controls a company that is required to have a statutory audit;
    3. has exceeded for two consecutive financial years at least one of the following limits: a) total assets in the balance sheet: 4 million euros; b) revenue from sales and services: 4 million euros; c) average number of employees during the financial year: 20. The article specifies that this obligation to appoint the control body or auditor ceases when, for three consecutive financial years, none of the above-mentioned limits has been exceeded.