ITALY Law and Practice Contributed by: Francesco Dialti, Vincenzo Cimmino, Valentina Bombino and Lucrezia Ghezzi, CBA Studio legale e tributario
(such as the annotation of the transfer on the land registry for a mortgage). Under the Consolidated Banking Law and the Secu- ritisation Law, no notification to the assigned debtor is needed for the transfer of the relevant receivables and related security and guarantees to be effective. 3.7 Debt Buyback Debt buyback is not common in financing transac- tions. As a general rule under Italian law, when the capacity as lender and borrower falls onto the same person, the underlying debt is extinguished together with ancillary rights (including security). Therefore, there is a risk of a court either: • reclassifying the loan purchase as a prepayment, which may be in breach of prepayment provisions contained in the loan agreement; or • subjecting the loan purchase to the pro rata shar- ing provisions in the loan agreement. To overcome this, a buyback may, eg, be structured as a purchase of the debt by the borrower’s holding company. 3.8 Public Acquisition Finance A tender offer of a listed company is usually financed by way of a loan. The bidder may only notify Consob (ie, the Italian authority in charge of financial markets) once it is in a position to fully fund the offer. To ensure that the offer is fully funded and can be settled at closing, before the launch of the offer the bidder must give evidence to Consob that it has funds readily available to pay the offer price for all shares subject to the offer. To this end, before publication of the offer document, the bidder must either (i) deposit cash or readily dis- posable securities in an amount equal to the maxi- mum value of the takeover (ie, the maximum amount that the bidder may be required to pay in case of full acceptance by the market of the takeover), or (ii)
obtain a “cash confirmation” letter from a bank or oth- er suitable financial institution confirming availability of the funds for the same amount, which is irrevocable and unconditional. 3.9 Recent Legal and Commercial Developments Italy implemented the Secondary Market Directive (Directive (EU) 2021/2167) on credit servicers and credit purchasers (the “SMD Directive”) by issuing Legislative Decree No 116 of 30 July 2024 (the “NPL Decree”), which amended the Consolidated Banking Law. The NPL Decree, in line with the SMD Directive, pro- vides for application of the new regime to financial NPLs only, thereby excluding other categories of defaulted and impaired loans, such as unlikely to pay (UTP) loans and commercial non-performing receiva- bles (eg, those originated by utilities companies). Purchase of NPLs from banks and other financial enti- ties has now been liberalised and can also be carried out by non-supervised entities. However, if the purchaser of receivables is not a bank or a financial intermediary or an Italian securitisation SPV, any credit servicing activity shall be carried out through an authorised credit servicer ( gestore del credito ) or through a bank or financial intermediary listed in the register under Article 106 of the Consoli- dated Banking Law. A further notable commercial development in the Ital- ian market in the last 12 months has been the carrying out of the first securitisation transactions where the underlying receivables are judicial claims; litigation funding is a very promising area of growth for the Ital- ian market in the near future. 3.10 Usury Laws For the purpose of usury laws, both interest and oth- er charges applicable in connection with a financing transaction shall be considered. In broad terms, there are two different types of usury provided for by Italian law:
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