On September 27, 2024, Legislative Decree No. 136 of September 13, 2024 («Correttivo-ter») was published in the Official Gazette. This represents the third—and currently final—Corrective Decree to the Business Crisis and Insolvency Code. The new corrective decree has introduced substantial amendments to several provisions of the Crisis Code. Beyond minor stylistic and detailed adjustments, the Correttivo-ter both incorporates certain practices or clarifies interpretive uncertainties and introduces some highly anticipated innovations for practitioners. This article aims to provide an overview of the most significant changes introduced by the Correttivo-ter regarding Simplified Composition, Debt Restructuring Agreements, and Tax Settlement.
THE SIMPLIFIED COMPOSITION
The Simplified Composition is a crisis resolution tool that requires the prior attempt—and subsequent failure—of the Negotiated Settlement. If this out-of-court solution proves unfeasible, the debtor may submit a specific application to initiate the Simplified Composition procedure.
For this condition to be verified, the appointed expert must have identified concrete prospects for recovery, confirming that the Negotiated Settlement was effectively initiated, that negotiations were conducted in «fairness and good faith,» and that potential solutions (both negotiated and otherwise) proved concretely impracticable.
That said, returning to the changes introduced by the Correttivo-ter, the first concerns Article 25-sexies, with the removal of the reference to the “positive” outcome of negotiations: Simplified Composition is no longer to be considered an immediate and direct consequence of the negative conclusion of the Negotiated Settlement since the Code provides for a subsequent compliance scrutiny by the court.
A new clause has also been added to the first paragraph of Article 25-sexies: “Within the deadline set in the first period, the entrepreneur may submit the application referred to in Article 40, even with a reservation to later file the proposal and the plan.” The provision allowing the entrepreneur to submit a “pre-emptive” Simplified Composition application, thereby aligning the rule in Article 44 with all crisis resolution tools, expands the range of mechanisms available to overcome the crisis.
In addition to this possibility, the new provisions in paragraph 3 expressly allow the court to grant an additional period of no more than fifteen days to make amendments, submit further changes, or produce new documents.
Moreover, among the changes introduced by the Correttivo-ter is the possibility of partially satisfying creditors secured by privileges, pledges, or mortgages according to the formula set out in Article 84, paragraph 5 (initially provided for Preventive Composition and now explicitly referenced in the provision under review): “provided that satisfaction is not less than what could be achieved through liquidation of the assets or rights, net of procedural costs.” Consequently, in such cases, the composition plan must include specific indications of the expected satisfaction even for creditors whose secured claims are downgraded to unsecured claims.
Finally, the Correttivo-ter has amended paragraph 3 of Article 25-sexies, expanding the range of elements subject to judicial scrutiny (known as the compliance scrutiny); now, before declaring the procedure open, the court must assess, in addition to whether negotiations were conducted fairly and in good faith and the plausibility of the plan, the proper formation of the classes.
DEBT RESTRUCTURING AGREEMENTS
With regard to Debt Restructuring Agreements (ADR), paragraph 2 of Article 57 was supplemented by introducing a reference to the provisions of Article 116 on preventive composition (transformations, mergers, and demergers) concerning extraordinary transactions outlined in the plan and related oppositions, to facilitate the restructuring pursued through the agreements.
The Corrective Decree also introduced paragraph 4-bis, which allows the debtor to request authorization to obtain financing in any form, expressly specifying the applicability of Articles 99, 101, and 102 of the Business Crisis and Insolvency Code (C.C.I.I.). It clarifies that financing may include the issuance of priority claims guarantees (prededucibili).
The Explanatory Memorandum notes that these interventions represent «the result of a systematic reorganization of the rules governing restructuring agreements and those for preventive composition. This reorganization eliminated all references to restructuring agreements in Articles 99, 101, and 102, included in Chapter III of Title IV of the Code dedicated solely to preventive composition, and incorporated the same rules into Article 57.»
Among the ancillary rules related to ADR, paragraph 2 of Article 58 was amended solely to clarify that opposition to the renegotiation of agreements or modifications to the plan must be filed by motion, with a reference to the procedure outlined in Article 48 of the C.C.I.I.
As for debt restructuring agreements with extended effectiveness (Article 61), corrections of a primarily terminological nature have been made, which can be summarized as follows:
- The reference to the financial, economic, and asset situation, for the sake of uniformity with other Code provisions that mention this document (as previously noted regarding the changes to the Negotiated Settlement) (paragraph 2, letter a).
- The reference to the parameter of the «measure of creditor satisfaction in the event of judicial liquidation» concerning the treatment of non-adhering creditors (paragraph 2, letter d).
- It has been clarified that the request for approval of the agreement must be notified to creditors by the debtor. The court, upon the debtor’s request, may also authorize atypical forms of notification under Article 151 of the Code of Civil Procedure to ensure due process and allow opposition by non-adhering creditors (paragraph 3).
TAX SETTLEMENT
The Correttivo-ter has completely revised the rules governing tax settlement under Article 63. It is important to note that this revision is not directly introduced by the new corrective decree but rather implements provisions from Decree-Laws No. 69/2023 and No. 145/2023.
The Explanatory Memorandum states:
«The article is amended to address the practical issues that arose following its entry into force. The amendment considers the emergency regulations introduced by Decree-Law No. 69/2023, which suspended the effectiveness of the relevant Code provisions, and Article 4-quinquies of Decree-Law No. 145/2023, which set forth rules regarding the submission of settlement proposals, required documentation, and the identification of competent offices to accept or reject the proposal.»
Regarding the modifications to the institution, it is now stipulated that the authorities must respond within no more than ninety days from the electronic notification (PEC) of the proposal. This deadline is extendable only in two cases:
- 60 days in the event of a modification to the proposal;
- 90 days if a new proposal has been submitted.
Now, the request for approval can only be submitted after receiving the authority’s acceptance or once the deadlines mentioned above have expired, thereby resolving a prior jurisprudential conflict.
Concerning the fiscal cram-down—a specific scenario arising when authorities fail to agree or express dissent, and under applicable conditions, forced approval may be requested—even if the authority’s agreement is critical, the following requirements must be jointly met for its applicability:
a) The agreement is not liquidatory in nature;
b) The total claims of other agreeing creditors constitute at least 25% of the overall amount;
c) The satisfaction of public creditors is not worse than the alternative of judicial liquidation as of the date of the proposal;
d) The satisfaction of public creditors is at least 50%, excluding penalties and interest, provided that deferred interest is paid at the legal rate (if the share of agreeing creditors is below 25%, the minimum satisfaction threshold rises to 60%).
Conversely, fiscal cram-down cannot be used if:
- Within the five years preceding the filing of the proposal, the debtor has entered into a tax settlement subsequently terminated by law, except in cases of renegotiation or modification of the agreement under Article 58 (including scenarios involving the succession of a business entity that previously entered into a terminated settlement or related tax debts).
- Or if the following conditions are jointly met:
i) Public creditor claims constitute 80% or more of the total debt; and
ii) The public debt arises primarily from (a) unpaid taxes over five non-consecutive fiscal periods or (b) at least one-third from the assessment of violations committed through various fraudulent actions.
