ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
3.9 Effects of a Borrower Becoming Insolvent Legislative Decree No 14 of 12 January 2019 (the “Insolvency Law”) regulates the crisis and insolvency situations of the borrower. The asset and financial imbalance of mutual funds, and in particular liquidation in cases of insolvency, is regulated by Article 57 paragraphs 6-bis and 6-bis.1 of Legislative Decree No 58 of 24 February 1998 (TUF). Article 57 paragraph 6-bis of the TUF provides that if the assets are insufficient to satisfy the fund’s obligations, and there is no reasonable prospect that this situation can be overcome, the creditors or the management company can request the fund’s judicial liquidation. In order to protect the holders of financial instru - ments issued in securitisation transactions, Arti - cle 4 of Law No 130 of 30 April 1999 expressly excludes from the application of the bankruptcy claw-back action, pursuant to the Insolvency Law, payments made by the assigned debtors in favour of the assignee company. The borrower’s insolvency is one of the cases of an event of default and it could lead to the acceleration of the loan. 3.10 Taxes on Loans Pursuant to Decree 601/1973, some loans can be exempt from registration tax, stamp duty, mortgage and cadastral taxes and taxes on gov - ernment concessions (otherwise applicable to the loan and the security package). The parties can expressly exercise the option of applying the substitute tax regime (0.25% of the principal amount of the loan) instead of the ordi - nary taxation regime to the facility agreement.
by the facility agreement and the security docu - ments. The lender shall notify the borrower that an event of default has occurred. The lender may withdraw from the facility agree - ment and/or accelerate the payment obligations of the borrower, and/or terminate the facility agreement. Upon withdrawal, acceleration of the pay - ment obligations or termination, all outstanding amounts will be immediately due and payable (save for any grace period permitted by law). The lender may be entitled to enforce the rel - evant securities. 3.7 Subordinating Existing Debt to Newly Created Debt Banks and companies’ shareholders (or funds’ unit holders), can enter into a subordination agreement. A subordination agreement establishes one debt as ranking behind another in priority for collect - ing repayment from a borrower. A second-in-line creditor collects only if and when the priority creditor has been fully paid. When a lender accepts a subordination agree - ment, it acknowledges that another party’s claim or interest will take precedence over its own in the insolvency, winding-up or liquidation of the borrower. 3.8 Lenders’ Liability Under Environmental Laws Lenders are not juridically liable in relation to environmental issues affecting borrowers.
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