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 14/2019 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 liquidation in cases of insolvency in particular, is regulated by Article 57(6-bis) and Article 57(6-bis.1) of Legislative Decree No 58/1998 of 24 February 1998 (the “TUF” ). Article 57(6-bis) of the TUF provides that if the assets are insufficient to satisfy the fund’s obli - gations 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 instruments issued in securitisation transac - tions, Article 4 of Law No 130/1999 of 30 April 1999 expressly excludes payments made by the assigned debtors in favour of the assignee company, from the application of the bankruptcy claw-back action, pursuant to the Insolvency Law. The borrower’s insolvency is one of the situations giving rise to a default event and could lead to the acceleration of the loan. 3.10 Taxes on Loans Under Decree No 601/1973, some loans can be exempt from registration tax, stamp duty, mort - gage and cadastral taxes and taxes on govern - ment 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.
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. In Italy, restrictions introduced during the COV - ID-19 pandemic that limited the ability of credi - tors to execute foreclosures or realise collateral on real estate have been removed. In addition, the market for the sale of non-performing notes is active in Italy, where specialised players pur - chase and manage these loans, helping the liquidity and recovery of the industry. 3.7 Subordinating Existing Debt to Newly Created Debt Banks and companies’ shareholders (or funds’ unitholders), can enter into a subordination agreement, establishing one debt as ranking behind another in priority for collecting repay - ment from a borrower. A second-in-line creditor only collects 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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