The Crisis of Companies from an Italian Perspective: Reorganization and Fresh Money

• DOI: http://doi.org/10.1002/iir.1260
• Date: 01 December 2016
• Author: Francesco Accettella
• Published date: 01 December 2016

The Crisis of Companies from an Italian

Perspective: Reorganization and Fresh

Money

Francesco Accettella*

Department of Legal and Social Sciences, University “G. d’Annunzio”of Chieti-Pescara, Pescara, Italy

Abstract

Today, the role of fresh money in the reorganization of companies is a central

matter in the Italian crisis law. The analysis comes from the recent reforms of

the Italian Bankruptcy Law, aimed at revitalizing the pre-insolvency procedures

for overcoming the crisis of companies. These reforms draw inspiration from

Chapter 11 of the U.S. Bankruptcy Code. In particular, three new rules have been

introduced in the Italian Bankruptcy Law in order to facilitate the obtaining of

credit by companies in crisis. These rules recognize priority in reimbursement

for claims related to financing. Their target is to incentivize those (not only banks)

who want to grant new finance to enterprises in crisis. The target is so important

for the legislator that the rules permit the discrimination of companies’creditors

on the basis of a judicial valuation of the conditions required for priority by the

law in specific cases. The traditional and important principle of equal treatment

of unsecured creditors is even more neglected. But the specific meaning of the rules

and their inclusion in a sort of company crisis law in time of crisis induce to confine

the forms of credit to which the rules refer to and to limit the space for extensive

interpretations or applications by analogy. Copyright © 2016 INSOL Interna-

tional and John Wiley & Sons, Ltd.

I. Introduction

This paper deals with the role of fresh money in the reorganization of enterprises

from an Italian perspective. One of the central topics of the recent reforms of the

Italian Bankruptcy Law (I.B.L., in Italian “regio decreto 16 marzo 1942, n. 267”),

in order to revitalize the in-court procedures for overcoming the crisis of compa-

nies, is the introduction of rules intended to facilitate financing.

*E-mail: francesco.accettella@unich.it

Copyright © 2016 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 25: 179–194 (2016)

Published online 17 October 2016 in Wiley Online Library

(wileyonlinelibrary.com). DOI: 10.1002/iir.1260

The aim of the paper is to clarify whether these new rules are suitable to provide

companies in crisis more funding opportunities and, in this way, to make the

Italian restructuring procedures more attractive. The fragmentation of the

reforming intervention needs an overall analysis of the rules, in order to clarify

whether they are based on a unitary and systematic pattern or take the form of

emergency legislation.

The analysis is concerned with the Italian regulatory framework, but the US re-

gime is also considered, because the Italian reforms are inspired in many ways by

Chapter 11 of the U.S. Bankruptcy Code (U.S.B.C.) and the specific regulation of

“dip financing.”

The second paragraph briefly outlines the original structure of the I.B.L. and its

evolution to the present, while the third paragraph contains a necessary premise on

the different regimes that today can be applied to the reorganization of enterprises

in crisis in the Italian law. The fourth paragraph, after remarking the essential role

of fresh finance in the attempts of reorganization, reminds the state of the art be-

fore the reforms, which started in 2010. The fifth and sixth paragraphs describe

the rules on financing to the companies in crisis introduced with the recent re-

forms. The seventh paragraph, in the light of the scopes of the rules, focuses on

the issues regarding the categories of lenders and the type of financing. The eighth

paragraph is dedicated to the effects that the judicial valuation on the priority

treatment of some claims may have on the principle of equal treatment of unse-

cured creditors. The ninth paragraph explores another rule, introduced by the re-

cent reforms for companies in crisis, which concerns legal capital but is however

connected to regulation regarding financing. The final paragraph sheds some light

on the main defects of the Italian rules and advances some proposals to better

stimulate the pre-insolvency financing.

II. The original structure of the Italian Bankruptcy Law: bankruptcy

and other procedures

The I.B.L. dates back to 1942 but has been repeatedly reformed. In particular, the

reform process has undergone a strong acceleration since 2005.

The main procedure set by the I.B.L. is bankruptcy (“fallimento”), a procedure

reserved for companies that are in a state of insolvency (“stato di insolvenza”). This

is the situation in which a company is no longer able to pay its debts regularly and

promptly. The bankruptcy procedure aims mainly to the satisfaction of creditors

through the judicial liquidation of the company’s assets. Operators have always

rated this procedure as inefficient, because of its long duration, the almost always

disastrous outcome of the bankruptcy sales of company assets and creditors’low

level of satisfaction.

Besides this main procedure, the original structure of the I.B.L. provided other

two alternatives, called the “concordato preventivo”and the “amministrazione

straordinaria,”whose aim was to allow companies to avoid bankruptcy. The first

procedure was originally reserved for companies that were in a state of insolvency

International Insolvency Review180

Copyright © 2016 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 25: 179–194 (2016)

DOI: 10.1002/iir