Restructuring Plan of insolvent company approved by creditors and court in Italy

Creditors agree to be paid with lesser guarantees and lower amounts than other restructuring legal tools

The Restructuring Plan subject to approval (Piano di Ristrutturazione soggetto a omologazione)

The restructuring plan subject to approval has the following characteristics:

- aims at the restructuring of the entrepreneur's company;

- provides for agreements concluded with the creditors outside of a bankruptcy procedure;

- produces effects that normally derive from the opening of the procedure and the approval of a Preventive Agreement procedure.

The restructuring plan subject to approval can be used, on an exclusively voluntary basis, by any economic entrepreneur who demonstrates that its company does not exceed the following parameters:

- total annual assets of € 300,000.00 in the 3 financial years preceding the date of filing of the application to open the procedure or from the start of the activity if of shorter duration;

- annual revenues of € 200,000.00 in the 3 financial years preceding the date of filing of the application to open the procedure or from the start of the activity if of shorter duration;

- unexpired debts of € 500,000.00;

such companies with these capital limits are called “minor companies”.

Both the agricultural enterprise and the smaller enterprise are excluded from judicial liquidation and cannot access either the Preventive settlement Agreement or the Restructuring Plan subject to approval of creditors.

The agricultural enterprise (but not the smaller enterprise) can access the Restructuring Agreements and the Moratorium Agreement.

The content of the plan may include:

- assignments of values ​​to the members in derogation of the privilege of their credits;

- satisfaction of privileged creditors in an amount lower than the liquidation value;

- satisfaction of unsecured creditors in an amount greater than the privileged ones (for example if strategic);

- that it is not necessary to indicate a specific utility to be assigned to the individual creditor;

- that it is sufficient to even envisage a mere chance of success;

- that no minimum satisfaction thresholds are set;

- that the procurement of new external resources is not required.

The only exceptions are the credits of privileged workers who must be satisfied in full within 30 days of approval.

Tax and social security credits must therefore be paid in full.

As in the Preventive Agreement with creditors in continuity, the division of creditors into classes is mandatory.

The plan can be approved by each class of creditors when the majority of credits admitted to voting is reached within it through the criterion of approval by 2/3 of the voting creditors, provided that creditors representing at least half of the credits of the same class have voted.

From the submission of the application until approval, the entrepreneur keeps the ordinary and extraordinary management of the company, under the control of the judicial commissioner, so that the dispossession of the debtor, who is responsible for the management of the company, does not occur.

The entrepreneur can therefore also carry out extraordinary administration acts (payments, establishment of pre-emptions, etc.) under his own responsibility, with the obligation to communicate to the judicial commissioner the intention to carry out such acts or to make payments that are not consistent with the restructuring plan. If the judicial commissioner finds that the act could cause harm to the creditors, he must report it to the entrepreneur; if the latter, despite the report, carries out the act, the commissioner informs the court for the purposes of possible revocation and opening of the judicial liquidation for fraudulent acts.

The admission phase is simplified: the court must verify only the mere rituality of the proposal and the correctness of the formation of the classes of creditors. In the admission decree, the court appoints the judicial commissioner and defines the starting and ending date for the creditors' voting operations.

During the approval of the restructuring plan, each dissenting creditor has the right to challenge the suitability of the agreement, only in this case the court proceeds to verify that the plan guarantees the satisfaction of the credit to an extent no less than the judicial liquidation and if the verification is positive, it proceeds to approval.

The approval of the Restructuring Plan is possible only if it is approved by each class of creditors. The entrepreneur, however, can contest the results of the vote attested by the report of the judicial commissioner certifying the lack of unanimity, requesting the verification of the count to the Court, with a request to be submitted within 15 days of filing the report itself.

Alternatively, the entrepreneur, if the proposal has not achieved unanimous approval by the classes, can modify the application by requesting the conversion of the procedure into a Preventive Agreement. The same possibility is expressly recognized to the entrepreneur if a creditor contests the suitability of the plan in the observations formulated to the judicial commissioner before the vote and at each stage of the procedure.

If, after 15 days from the filing of the report, the entrepreneur does not request a recount or conversion of the proceedings, the judicial commissioner must report the failure to reach unanimity to the court which, in the presence of the state of insolvency and the relative request, may order the opening of judicial liquidation.