The document contains legal content related to a legislative change (D. Lgs. 13 settembre 2024, n. 136, „Correttivo-ter“), specifically addressing the modifications made to the Codice della Crisi d’Impresa e dell’Insolvenza (Corporate Crisis and Insolvency Code). Here’s the translation of the initial portion:

On September 27, 2024, the Legislative Decree No. 136 of September 13, 2024 („Correttivo-ter“) was published in the Official Gazette. This is the third and currently final corrective decree to the Corporate Crisis and Insolvency Code.
The new corrective decree has made substantial modifications to numerous provisions of the Corporate Crisis Code. Aside from some stylistic adjustments and minor details, the „Correttivo-ter“ both adopts certain practices and resolves interpretative doubts, while also introducing specific, long-awaited innovations for practitioners.

This contribution aims to provide an overview of the major changes introduced by the Correttivo to the Concordato Preventivo (Preventive Arrangement).

THE PREVENTIVE ARRANGEMENT

The Corrective Decree has introduced several changes to the Concordato Preventivo (Preventive Arrangement), breathing new life into its regulation, with the aim of resolving the interpretative doubts that had arisen.
Starting with the first modification in this section of the Code, the so-called „preliminary phase“ under Article 44 of the Corporate Crisis and Insolvency Code (C.C.I.I.) has undergone some changes, with clearer boundaries set for the submission of the „blank“ preventive arrangement request.

The rationale for this modification has been specified in the Explanatory Report, which states that the preliminary application filed within the context of the unified procedure does not, in itself, lead to the preventive arrangement. It is emphasized that, if the debtor, by filing the application under Article 40 of the C.C.I.I.—with the option to submit the proposal, the plan, and the agreements later—does not choose the tool, the applicable regime is the more rigid one of the preventive arrangement. This is because (according to the Explanatory Report) “the ‘application under Article 44’ does not exist as such, as it is the same application filed with the request under Article 40, without the submission of the complete documentation.”

Entering into detail, Subsection 1, Letter a) of Article 44 of the Corporate Crisis and Insolvency Code (C.C.I.I.) has been amended to align with the changes made to Article 46 of the C.C.I.I., allowing for the filing of a preventive arrangement request with reservation even if a judicial liquidation application is pending, provided that a crisis and insolvency settlement plan is submitted.
On this point, the Explanatory Report adds the following:
“In this way, if the debtor, by filing the application under Article 40 with the option to later submit the proposal, the plan, and the agreements […], does not choose the tool, the applicable regime is the more rigid one of the preventive arrangement. […] In this case, however, the filing of a draft crisis and insolvency regulation plan, drawn up in accordance with the chosen instrument, is required. This same draft plan […] has become a requirement to obtain an extension of the deadline set by the court, and to counterbalance the fact that, in order to favor the achievement of a negotiated solution, the provision that previously did not allow an extension of the deadline in the presence of judicial liquidation applications against the same company has been amended.”

Three new subsections have been introduced into the aforementioned provision:

• Subsection 1-bis, which clarifies that from the date of filing the application until the expiration of the deadline set by Subsection 1, Letter a), the effects of the so-called „full“ application under Article 46 of the Corporate Crisis and Insolvency Code (C.C.I.I.) shall apply;
• Subsection 1-ter, connected to the previous subsection, which establishes the ineffectiveness of extraordinary administrative acts carried out by the entrepreneur without the necessary authorizations, as well as the consequent revocation of the decree setting the deadlines under Article 44, Subsection 1, C.C.I.I.;
• Subsection 1-quater, which allows the entrepreneur to differentiate the related effects right from the „preliminary“ application, making them consistent with those provided for the chosen instrument.

In line with the aforementioned changes, Article 96 of the Corporate Crisis and Insolvency Code (C.C.I.I.) has also been amended to further clarify that the effects resulting from the opening of the arrangement procedure in the preventive arrangement will only take effect with the filing of the „full“ application, as the filing of the application under Article 44 of the C.C.I.I., as amended, produces ad hoc effects with a general character for all crisis regulation instruments and no longer specific to the preventive arrangement procedure alone. Consequently, references to the provisions of Articles 145, and from 153 to 162 of the C.C.I.I. have been removed.

As for the changes to the substantive regulation of the Preventive Arrangement, one of the main amendments is the new definition of the liquidation value under Article 87, Subsection 1, Letter c), C.C.I.I., which corresponds to the realizable result compared to the judicial liquidation scenario, as well as the liquidation of assets and rights (also taking into account the potential and reasonable positive outcome of recovery or compensatory actions), net of the related procedural costs. It is also clarified that the liquidation value must include the higher economic value, which can always be realized during judicial liquidation, associated with the sale of the business as a going concern, where possible.

This amendment is accompanied by changes made to Letters e) and f), which respectively not only aim to analytically describe the methods and timing of fulfilling the proposal but, more importantly, indicate the effects that fulfillment produces on the financial plan. The first provides a more precise identification of the economic-financial situation, whose balance must be guaranteed by the industrial plan in the case of continuity; in the second, a requirement for the arrangement plan in continuity is the indication of the expected costs and revenues from continuity, when the latter is ensured by a third party to whom the business is transferred as a going concern.

The above-mentioned corrections were necessary because the previous wording did not align well with the concept of business continuity, which explicitly includes both direct continuity—meaning the continuation of the business by the same debtor—and indirect continuity, when the functioning business (or a part of it) is transferred to third parties.

Also, in Article 87 of the Corporate Crisis and Insolvency Code (C.C.I.I.), Subsection 1 has been amended to include Letter p-bis), which introduces, as a requirement of the plan, the provision of specific risk funds where necessary, especially if there are financing agreements backed by public support measures, as in the cases of guarantees provided by the MedioCredito Centrale (MCC) and Sace S.p.A. (Sace).

The above provision is not innovative but reflects the established practice to date, specifically regarding credits secured by support measures recognized in the recent past, during and after the pandemic crisis.

Moreover, in the Preventive Arrangement, the provisions on tax settlements under Article 88 of the C.C.I.I. have been modified to clarify, in particular, the relationship with the arrangement in business continuity, as well as to align them with the changes made to Article 63 concerning the methods of adhesion and the identification of the competent offices.

For this reason, the rules for drafting the plan under Article 84, Subsections 6 and 7, have been corrected, as well as the comparison between the proposed satisfaction and the satisfaction obtainable in the case of judicial liquidation, and the fiscal cram-down in the arrangement in continuity has been specified.

A regulatory gap, which had existed since the introduction of the Code, has also been addressed with the introduction of Article 93-bis of the C.C.I.I., providing for the institute of an appeal against the decrees of the delegated judge, as well as against the acts and omissions of the judicial commissioner or the liquidator, and setting out the relevant rules with reference to similar provisions of judicial liquidation (Articles 124 and 133 of the C.C.I.I.).

Regarding the final phase of the procedure for the homologation of the preventive arrangement proposal, the „Correttivo-ter“ has made further significant amendments.

Firstly, the phase of non-approval of the arrangement under Article 111 of the Corporate Crisis and Insolvency Code (C.C.I.I.) has been revisited, with the aim of aligning the procedure that follows the failure to reach the necessary majorities for the homologation of the arrangement with the hypothesis of the cross-class debt restructuring introduced following the implementation of the Insolvency Directive. In the case of an arrangement in business continuity, it is now possible that, following the failure to achieve unanimous approval from the classes, the debtor may request homologation after a cross-class restructuring (or cross-class cram-down).

It is logical that, in this case, the judge cannot immediately report the result of the vote to the Court, as they must wait for the debtor’s determinations and, in the case of arrangements in continuity, must wait seven days before reporting the outcome of the vote to the Court.

Secondly, the homologation judgment under Article 112 of the C.C.I.I. has been modified to resolve the interpretative doubts that arose regarding cross-class restructuring in the arrangement in business continuity. It has been confirmed that, in the absence of a positive vote by the majority of the classes, the arrangement may be homologated with the approval of even a single class that is partially satisfied, which would have received a better treatment if the value exceeding the liquidation value had been distributed according to the order of privileges.

Finally, to complete the regulation on homologation, Article 114-bis of the C.C.I.I. has been introduced, providing specific provisions on liquidation in the case of an arrangement with business continuity. The provision includes:

• Subsection 1: The possibility for the Court to appoint a judicial liquidator in the case of a partially liquidating arrangement plan or one that contemplates the sale of the business as a going concern without identifying a buyer (unlike the provisions set out in Article 91 of the C.C.I.I.). The provision assigns the appointed liquidator the task of managing the liquidation operations in accordance with the principles of publicity and transparency inherent in competitive sales;
• Subsections 2 and 3: The applicability of the general provisions on forced sales to the sales carried out by the liquidator, explicitly establishing the purging of the sold assets from any prejudicial formalities encumbering them.

Regarding extraordinary operations (Article 116 of the Corporate Crisis and Insolvency Code, C.C.I.I.), it is now required that the arrangement plan, which includes such operations, along with the related projects, be published in the business register. Objections must be raised exclusively within the homologation procedure.

Finally, Article 118-bis C.C.I.I. has been introduced, containing provisions concerning substantial modifications to the approved plan or proposal and regulating the procedure for such modifications.
This provision aims to fill a regulatory gap in cases where a modification to the plan is necessary during the execution phase of the arrangement (as provided for restructuring agreements under Article 58 of the C.C.I.I.). It now specifies that, if substantial modifications to the plan are necessary after the homologation of the arrangement in business continuity to fulfill the proposal, the debtor must prepare a new proposal. This new proposal must be subject to the certification provided under Article 87, Subsection 3, C.C.I.I. and must be communicated to the judicial commissioner, who will report to the court in accordance with Article 118, Subsection 1, C.C.I.I.

The rationale for this provision is to formalize the modifications made to the plan to ensure the correct fulfillment of the proposal, as well as to protect against the potential revocation of implementing acts.

Subsequently, the Court, after verifying the substantial nature of the changes in relation to the previously homologated proposal, will order the publication of the modified plan and certification in the business register. Creditors will be notified via registered letter or certified email. Objections may be raised within thirty days from receipt of the notice by filing an appeal with the Court, following the procedure outlined in Article 48, Subsections 1, 2, and 3, C.C.I.I.; at the conclusion of this, the Court will issue a reasoned decree.

Lastly, the Corrective Decree has made some changes to the regulation of protective and precautionary measures, which also have a specific impact on the unified procedure.
Specifically, regarding precautionary measures, the amendment to Article 54, Subsection 1, C.C.I.I. clarifies that such measures can be requested even during the preliminary phase, eliminating a terminological inaccuracy that would have continued to cause uncertainty about the nature and function of the unified procedure.
On this point, the Explanatory Report specifies that „the regime of precautionary measures applies not only when a ‚full‘ application or an application for the opening of judicial liquidation has been filed, but in any case where the procedure has been initiated with the application under Article 40, which is the same application used for the simplified arrangement for asset liquidation or the request for an extension under Article 44.“

Regarding atypical protective measures, it has been clarified in Article 54, Subsection 2, last sentence, C.C.I.I., that they can only be requested if the proposal, the plan, or the agreements have been filed. Therefore, such a request is not permitted in a procedure initiated with reservation, as its indeterminacy—if the debtor does not invoke Subsection 1-ter of Article 44 of the C.C.I.I.—would prevent the judge from assessing the existence of the requirements for granting the atypical protective measure request.