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ITALY CORONAVIRUS EMERGENCY

  • Italy
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17-04-2020

Extraordinary provisions for civil and commercial proceedings, company law and insolvency proceedings

 

Update: 17 April 2020

 

The Law Decree no. 23 issued on 8 April 2020 (“Decreto Liquidità”, hereinafter the “Law Decree”) provides, inter alia, an extension of the period of effectiveness of the provisions for civil proceedings set out in the Law Decree no. 18 issued on 17 March 2020 (“Decreto Cura Italia”) and sets out provisions for bankruptcy and other insolvency proceedings, and also amendments to the company law (on reduction of the corporate capital, dissolution of companies, drawing up of the financial statements, shareholders’ loans) all aimed to ensure the continuation of business activities.

 

The provisions are the following.  The provisions for the civil proceedings, which were previously taken, are updated with the new period of effectiveness.

 

1.        Civil and commercial proceedings

 

1.1         From 9 March throughout 11 May 2020:

-    all hearings scheduled during this period will be postponed after 11 May 2020;

-    the judiciary terms are automatically stayed. The suspension of terms applies to all the procedural terms provided for by Italian law.

 

Hearings will only be held when they are considered as particularly urgent. However, such urgent hearings will only be held on condition that the respect of hygienic and health standards provided by the national Authorities is guaranteed (e.g. e-filing of the documents and telematic handling of the hearing).

 

1.2     From 9 March throughout 11 May 2020 the terms for all ADR proceedings (e.g. mediation proceedings) are also automatically stayed.

 

The suspension only applies to the ADR proceedings commenced before 9 March and provided that the ADR is a condition to start court proceedings.

 

The suspension also applies to the terms of maximum length of the proceedings.

 

1.3     From 12 May throughout 30 June 2020 the local courts are entitled to adopt their own organizational measures in order to ensure that the hygienic and health standards provided by the national authorities are respected; the purpose is avoiding gatherings and close contacts between people in the judiciary offices.

 

The above measures may concern: on the one hand, limitations to the public access in the offices, reductions of the opening hours and, if need be, the closure of the offices (only in case that the activity is not urgent); on the other hand, new regulations in the conduct of the hearings (e.g. through videoconference or similar technology).

 

1.4     The statute of limitation provisions are also stayed for the rights that can be asserted only by carrying out activities precluded during the suspension period (9 March-11 May 2020) and in the possible suspension period set out by the local courts (12 May-30 June 2020).

 

1.5      It is possible that, within 11 May 2020, further measures are adopted in consistency with the Law Decree by the local courts and ADR bodies in order to regulate the conduct of the civil proceedings after that period.

 

2.        Reduction of the corporate capital, dissolution, drawing up of the financial statements, shareholders’ loans

 

2.1     From 9 April throughout 31 December 2020, the provisions of the Italian Civil Code related to the duties of directors and auditors of companies  (whose liability is limited by shares or by quotas), in case of reduction of the corporate capital for losses and reduction of the corporate capital under the legal threshold, shall not apply in the case that the circumstances (that, otherwise, would cause the application of such provisions) occurred during the business year closed within 31 December 2020.

 

2.2     From 9 April throughout 31 December 2020 the cause for the dissolution due to the reduction or losses of the corporate capital shall not apply to limited liability companies and cooperative companies.

 

2.3     The financial statements related to the business year closing on 31 December 2020 shall be prepared by the directors on a going-concern basis, provided that such perspective existed in the financial statements of the business year closed before 23 February 2020.  The relevant evaluation principles shall be specifically explained in the notes to the financial statements. 

 

The provision shall also apply to the financial statements closed within 23 February 2020 which have not been approved yet.

 

2.4     The provisions concerning the subordination of the shareholders’ loans and the intercompany loans granted from 9 April throughout 31 December 2020 shall not apply.

 

3. Bankruptcy and other insolvency proceedings

 

3.1     The entry into force of the new Company Crisis and Insolvency Code (Legislative Decree no. 14 of 12 January 2019) was postponed from 15 August 2020 to 1 September 2021.

 

3.2  The Law Decree also provides measures for both Pre-insolvency Composition with Creditors and Debt Restructuring Arrangements which aim, on the one hand, to allow a postponement of the deadline for the fulfilment of the arrangements already approved by the Court and expiring during the period between 23 February 2020 and 31 December 2021; on the other, in the case of agreements not yet approved by the Court but pending on 23 February 2020, to allow the debtor to obtain a time limit for the filing of a new plan (composition with creditors) or a new proposal (debt restructuring arrangement) or only to amend the deadline for the fulfilment of the agreement.

 

3.3   Applications for bankruptcy and for the admission to extraordinary administration or to compulsory administrative liquidation filed between 9 March and 30 June 2020 shall not be admitted by the courts.

If the application is not admitted in the relevant period but at a later date the debtor is declared insolvent, the relevant period will not be taken into account for the purposes of determining the time limit for clawback actions.

 

 

 

 

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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