On September 27, 2024, Legislative Decree No. 136 of September 13, 2024 (“Corrective Decree Ter”) was published in the Official Gazette. This is the third—and currently final—Corrective Decree to the Business Crisis and Insolvency Code.
The new decree introduces substantial modifications to numerous provisions of the Crisis Code. Beyond minor stylistic and detailed adjustments, the Corrective Decree Ter both incorporates certain established practices, resolves interpretive doubts, and introduces specific innovations that have been widely anticipated by practitioners in the field.
This article aims to provide an overview of the most significant changes introduced by the Corrective Decree Ter in relation to over-indebtedness crisis resolution procedures and the debt discharge framework.
Over-indebtedness
The Corrective Decree has also introduced several changes to the procedures for resolving over-indebtedness crises, originally established in Italian law with Law No. 3/2012 and later incorporated—albeit under different names—into the Business Crisis and Insolvency Code (C.C.I.I.).
Preliminarily, with the amendment of Article 65 C.C.I.I., the Corrective Decree introduced a prohibition on applicants accessing simplified composition (concordato minore) and consumer debt restructuring procedures through the filing of a preliminary or blank application under Article 44 C.C.I.I.
First, consumer debt restructuring has undergone modifications, where the Corrective Decree significantly expanded the scope of subjective eligibility criteria for accessing the procedure. This procedure, it should be noted, is exclusively reserved for consumers, who alone are entitled to request its initiation.
Indeed, Article 2(e) C.C.I.I. has been amended to specify that the designation of „consumer“ applies exclusively to debts incurred by natural persons acting for purposes unrelated to entrepreneurial, commercial, artisanal, or professional activities. Consequently, the status of „consumer“ is now also granted to partners of general partnerships (s.n.c.), limited partnerships (s.a.s.), and limited liability partnerships (s.a.p.a.), but only with respect to obligations undertaken for non-business purposes.
As a result, individual partners, including those with unlimited liability for the company’s obligations, are allowed access to over-indebtedness procedures. The possibility of extending the effects of the declaration of commencement of judicial liquidation under Article 256 C.C.I.I. is not, in itself, considered a barrier to accessing over-indebtedness procedures, provided that no prejudice is caused to the company’s creditors.
Furthermore, the possibility is now recognized for members of the same family to submit a single resolution plan for over-indebtedness, known as a „family plan,“ allowing access to a unified procedure, as provided by Article 66 C.C.I.I.
Article 67(4) C.C.I.I. has also been amended, adding a final sentence to resolve interpretative uncertainties regarding the admissibility of a moratorium on the payment of secured or privileged debts within the consumer debt restructuring plan and its temporal limits.
To enhance the procedure’s effectiveness and make it more appealing, the moratorium has been expressly introduced—or rather reintroduced, as it was previously provided for one year following homologation under Law No. 3/2012—with a new maximum duration of two years. This extension aims to balance the need to facilitate restructuring processes with the requirement to adequately protect the interests of creditors who are not involved in voting on the plan.
The following two paragraphs have been added to the aforementioned rule:
i. paragraph 5, which provides the possibility of reimbursement, at the agreed deadline, of the upcoming installments of the mortgage loan contract secured by a mortgage on the debtor’s primary residence, if the debtor has fulfilled their obligations, or if the Judge authorizes the payment of the overdue amounts;
ii. paragraph 6, which provides for the conduct of the procedure before a single judge.
Regarding the minor concordato (composition with creditors), amendments have been made to Article 77 of the Italian Insolvency Code (C.C.I.I.) concerning the subjective conditions that prevent access to this procedure. The correction has introduced the inadmissibility of the composition proposal if the over-indebted person has already received the benefit of debt discharge within the five years prior to the submission of the request, removing the previous condition that prevented the debtor from accessing the procedure if they had used over-indebtedness procedures in the five years prior.
Additionally, Article 74, paragraph 2, of the C.C.I.I. has been amended to clarify the concept of „external resources“ referenced in the provision. It is now considered more consistent with the purpose of the rule, and more easily verifiable by the court — resulting in a reduced admission procedure — to refer to the increase in the available assets at the time of the request rather than the increase in creditor satisfaction.
Lastly, the controlled liquidation of the over-indebted person’s assets has been the procedure most heavily modified by the new Corrective Decree.
Among the changes, the amendment to Article 268 of the Italian Insolvency Code (C.C.I.I.) resolved, in a negative sense, the doubt regarding the use of the controlled liquidation procedure for the individual entrepreneur when there is no asset to liquidate, in order to prevent the initiation of unnecessary proceedings for creditors and costly procedures for the state. In fact, in the case of a negative result, the request is inadmissible if the OCC (Official Creditors‘ Committee) does not confirm that it is possible to acquire assets to distribute to creditors, even through the exercise of legal actions.
The rule governing the OCC’s report (Article 269 C.C.I.I.) has also been amended. The report now explicitly must include a careful evaluation of the debtor’s diligence in assuming the obligations that caused the crisis, and this assessment could influence the subsequent debt discharge.
The most innovative change — and certainly the most awaited by creditors — is the amendment to Article 270 C.C.I.I., which has extended the deadline for submitting claims for admission to the creditors‘ list from 60 to 90 days after the creditor is notified of the judgment opening the procedure (with a further possible 30-day extension under Article 272 C.C.I.I.).
The judgment must then be notified to the debtor, creditors, and holders of rights over the assets subject to liquidation.
In light of the new content of Article 271 of the Italian Insolvency Code (C.C.I.I.), if the creditor files a petition, the debtor may still request access to debt restructuring or a minor composition procedure, and the Judge cannot declare the controlled liquidation procedure open before examining the debtor’s application, in accordance with the principle of preference for agreed crisis or insolvency resolution procedures outlined in Article 7, paragraph 2, C.C.I.I.
Article 275 of the C.C.I.I. introduces several novelties regarding the liquidation plan (for which the Liquidator must report to the Judge every six months), semi-annual reports (failure to file which is grounds for dismissal), the presentation of the financial statement, and the potential replacement of the Liquidator (with the Judge having the authority to reduce or eliminate their compensation).
Finally, it is important to highlight that the Code has removed the provision requiring a minimum duration of the procedure, which was previously set to four years after the submission of the request.
Debit discharge
The third Corrective Decree also intervenes on the institution of debt discharge: as clarified in the Explanatory Report, the amendments made by the Corrective Decree aim to streamline its regulation, adapting it to the specific characteristics of judicial liquidation on one hand, and controlled liquidation on the other.
In this context, Chapter X has been reorganized with the inclusion, in the first section, of the General Provisions applicable to all types of debt discharge, and with the introduction of two additional sections: Section I-bis, dedicated to provisions on judicial liquidation, and Section II, related to debt discharge in controlled liquidation.
More specifically, regarding judicial liquidation, following the amendment of paragraphs 1 and 2 of Article 281 of the Italian Insolvency Code (C.C.I.I.), it is now provided that:
„The court, upon the debtor’s request, concurrently with the issuance of the decree closing the procedure, unless otherwise stated in Article 280, paragraph 1, letter a) second sentence, having heard the relevant bodies and verified the existence of the conditions set out in Articles 278, 279, and 280, declares the unpaid bankruptcy debts unenforceable against the debtor. The debtor’s request is communicated by the trustee to the creditors admitted to the claims register, who may submit observations within a period of fifteen days.“
Additionally, „The court shall proceed in the same manner when at least three years have passed since the date the judicial liquidation procedure was opened“ (therefore, the provision for the debtor’s request in the case of debt discharge pronounced after three years from the opening of the procedure has been removed).
Moreover, paragraph 3 of Article 281 C.C.I.I. has been replaced in order to clarify, as specified in the explanatory report, that the trustee’s summary report is only required when the closure is decided before the three-year period, as if the discharge occurs in the third year from the opening of the procedure, the judicial liquidation is still ongoing, and there is no final summary report to prepare.
