NEGOTIATED SETTLEMENT FOR THE RESOLUTION OF ENTERPRISE CRISIS: FACILITATIVE MEASURES FOR THE ENTREPRENEUR

 On July 15, 2022, the new "Code of Business Crisis and Insolvency", Legislative Decree No. 14/2019, finally came into force.The issue of business crisis is undoubtedly relevant and topical, especially in light of recent events that affect the global market on a daily basis, with rising prices of raw materials, most energy sources, transportation costs, and so on, all components that undermine the business continuity of a multitude of companies. 

Among the various regulatory changes and novelties that have occurred, the new "Code of Corporate Crisis and Insolvency" has introduced a new resolution tool, namely the "Negotiated Settlement for the Resolution of Corporate Crisis": undoubtedly, it can be considered among the most relevant novelties, as it is an out-of-court procedure with which the legislator intends to facilitate the rehabilitation of all those enterprises that, although they are in such a condition of asset or economic-financial imbalance that a crisis or insolvency is likely, have the necessary potential to remain operating in the market.

MAIN REGULATORY CONTENTS
Commercial and agricultural entrepreneurs registered in the Business Register who are in such a condition of asset, economic and financial imbalance that a crisis or insolvency is likely to occur may voluntarily access it: entrepreneurs will be able to apply to the Chamber of Commerce, in whose territorial area the company's registered office is located, for the appointment of an independent expert whose task is to facilitate negotiations with creditors and any other interested parties, in order to identify a solution for overcoming the state of crisis, including through the use of extraordinary transactions such as, for example, the transfer of the company or branches thereof.
With respect to the operational technicalities related to the appointment or requirements of the independent expert and whatnot, it is deemed appropriate to highlight here most of the protective measures instituted in favor of the entrepreneur, valid from the acceptance of the petition until its filing:

• application of asset protective measures, e.g. suspension of real estate enforcement proceedings, through application to the Court and publicity of the application in public records;
• non-application of Art. 2446, paragraphs 2 and 3, Civil Code, Art. 2447 Civil Code, Art. 2482-bis paragraphs 5 and 6, Civil Code and Art. 2482-ter Civil Code, i.e., the disciplines of share capital reduction for losses or restoration of the legal minimum;
• the cause of dissolution of the company due to reduction or loss of share capital, as per Article 2484, paragraph 1, No. 4, Civil Code and Article 2545-duodecies Civil Code, does not occur;
• with regard to the management of the enterprise during the pendency of the negotiations, the entrepreneur retains its ordinary and extraordinary management, provided that no harm is caused to the economic and financial sustainability of the business; if in the course of the proceedings it should prove insolvent but there are concrete prospects for reorganization, the entrepreneur is obliged to manage the enterprise in the prevailing interest of creditors;
• significant tax benefits, such as, by way of example, the reduction to the legal measure of tax liabilities accruing from the acceptance of the assignment by the expert until the conclusion of the Negotiated Settlement procedure;
• possibility of petitioning the Court to obtain authorization for the transfer in any form of the company or individual branches, allowing an exception to the general rule set forth in Article 2560, paragraph 2, of the Civil Code, whereby the purchaser is liable for the debts of the transferor when such debts appear on the books of account, without prejudice to the discipline of labor relations and workers' claims, as described in Article 2112 of the Civil Code;
• apply to the court for permission to take out predeductible financing;
• a wide range of ways of concluding negotiations, even before the end of the term of negotiations, in order to facilitate a successful outcome with creditors. 

CONSIDERATIONS
It seems clear that the legislation has introduced an instrument that can in some way facilitate and lift the fortunes of companies in crisis or economic collapse, introducing for the first time a procedure that is, at least in its initial stages and in some of its possible outcomes, totally extra-judicial and that introduces a series of real and tangible benefits for the entrepreneur. 
This will be followed by another in-depth article, deemed both useful and necessary, on the range of ways in which negotiations can be concluded. 

Edited by: Luigi Alfredo Carunchio, Chartered Accountant and Statutory Auditor

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For more information:

luigicarunchio@valoreassociati.it