ITALY Trends and Developments Contributed by: Cristian Fischetti, LEXIA
restructuring or insolvency proceedings to which the debtor itself has requested access. As regards the prerequisites, pursuant to Article 12, Paragraph 1, CCII, the application for the appoint - ment of an Expert may be submitted both by com - mercial and agricultural entrepreneurs registered in the Register of Companies and by small businesses, defined as “below-threshold companies” under Article 25- quater CCII. Small businesses may benefit from a simplified version of the CNC, which, among other aspects, requires fewer documents to be submitted with the application. The aforementioned debtors may benefit from the CNC in any situation where they are experiencing a crisis situation or insolvency, or – unlike other crisis resolution tools – merely in a state of asset or financial imbalance. In any case, it is pivotal that the plan for restructuring the debt, prepared by the company for overcoming the crisis, is adequately feasible and rea - sonably achievable considering the degree of imbal - ance. A crisis situation refers to a phase of financial imbal - ance in which the company begins to show signs of tension in liquidity or profitability but still remains capable of restoring equilibrium through timely cor - rective actions. This stage precedes the actual crisis stage, which arises when insolvency becomes likely and is characterised by the inadequacy of prospective cash flows to satisfy the debtor’s obligations over the following 12 months. Insolvency, in turn, denotes a situation in which defaults or other external circumstances reveal that the debtor is no longer able to regularly fulfil its obli - gations, marking a state of structural financial decline that could justify the beginning of formal insolvency proceedings. 4. The managing of the company It should be noted that, for CNC purposes, the debtor is not deprived of the powers to manage the company pursuant to Article 21 CCII: it continues to manage the company, provided that such activities do not jeop - ardise its economic and financial sustainability.
Article 21 CCII also regulates the execution of extraor - dinary activities, ie, acts capable of affecting the debtor’s assets to the detriment of creditors. Before executing them or making payments inconsistent with the ongoing negotiations or with the prospective turnaround, the debtor must give prior written notice to the appointed Expert. The purpose of this notice is to allow the Expert to assess whether those acts may prejudice creditors, the negotiations or the restructuring prospects. Fur - thermore, where protective or precautionary measures have been granted, Article 21 CCII requires the Expert to inform the court under Article 19, Paragraph 6, CCII so that it may revoke or shorten their duration in case the debtor decides to not consider the opinion of the Expert. According to Article 22 CCII, the debtor can request from the court, among other things, the authorisation to enter into super-senior loans or to transfer the entire business or a business unit to a third party. In this regard, it is worth mentioning an act frequently carried out in practice, namely, the lease of the entire business or one of its branches. Contrary to what might be assumed, such act does not require judicial authorisation, on the basis that it is not a final transfer, but may be carried out subject to a favourable opinion from the appointed Expert, as consistently clarified by case law. 5. The Expert’s role Within the CNC, the Expert plays a central role in veri - fying the company’s prospects of recovery and guiding the entrepreneur through the negotiation process. He/ she identifies the key stakeholders, organises meet - ings, co-ordinates discussions and, where appropri - ate, assists the company in finding suitable solutions to overcome the distress. The Expert also ensures that negotiations are conducted in good faith and aimed at reaching balanced, consensual solutions capable of preserving business continuity. When necessary, the Expert may invite the parties to renegotiate existing contracts whose performance has become exces - sively burdensome or whose initial balance has been disturbed by supervening circumstances. In addition, the Expert provides opinions on acts of extraordinary
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