The changes introduced by the bankruptcy law reform

Alessandra Nodari, an Andersen professional expert in reorganization procedures and bankruptcy and corporate litigation, and Marcello Pollio devote an in-depth analysis to the reform of the bankruptcy law in force since last 15 July, clarified by a recent Guide to the Crisis Code published by Assonime.

The new approach to crisis management and business protection

The duty of fairness is one of the cornerstones of the business crisis and has been extended by Article 4 of the Code (Legislative Decree 14/2019) to all parties involved. It means that creditors are also subject to the burden of acting in good faith and transparency with speculative precepts to those of the debtor, just as for entrepreneurs and main parties affected by the crisis. They are therefore bound to maintain confidentiality on the debtor’s situation, their initiatives and the information they have acquired, including with regard to the debtor’s initiation of negotiations.

Creditors and all parties involved (such as suppliers and customers) must cooperate loyally and expeditiously with the entrepreneur and the expert appointed in the negotiated crisis resolution. Furthermore, they mustgive timely and reasoned feedback to the proposals and requests received, to ensure the rapidity of the procedures and promote their effectiveness. In this way, the relevance of the role of financial creditors for the success of the attempt to reorganise the company is clarified: it is their duty to take an active part in the negotiations and to avoid obstructive or dilatory behaviour. However, this duty does correspond to the duty to cooperate in the best way possible to conclude the negotiations, and not to consent to the deptor’s proposal. Failure to do so may result in actions for damages by the debtor, other creditors or the administrator (in the event of subsequent bankruptcy).

The debtor’s duties

In addition to the obligation of fairness and good faith, the entrepreneur is subject to three types of obligations:

• to inform creditors of the company’s situation through complete, truthful, and transparent notifications
• to take appropriate measures in good time to overcome the difficulties and the rapid definition of the instruments chosen, in compliance to ensure the early emergence of situations of difficulty to maximise the chances of overcoming them
• manage assets in the priority interest of debtors during proceedings under the code, avoiding conduct that jeopardizes their asset security.