Alert procedures in bankruptcy proceedings

The start-up phase of the procedure – The hearing of the debtor

From a purely procedural point of view, the consequences deriving from the alert are outlined in a synthetic manner by art. 18 CCI.

In fact, the law provides that – within 15 days of the notifications pursuant to articles 14 and 15 of the ICC or by the request formulated by the debtor to that effect – the confidential and confidential convocation and hearing of the debtor and, where existing, of the supervisory bodies are held.

According to the legislator, the management methods of this phase must, therefore, be such as to ensure that third parties do not become aware of the procedure, in order to avoid the spread of unnecessary alarms that could affect the business image of the company and its possibility of further access to credit.

Once the hearing is over, the board must evaluate, based on the data collected, whether or not there are clear indications of a crisis, also in light of the information provided about the initiatives implemented as a result of the reports.

If it considers that a crisis situation does not exist, the college arranges for the filing of the reports received, giving notice through the contact person to the subjects who had made the report.

In any case, the board arranges filing when the corporate control body, if existing or, in its absence, an independent professional, attests to the existence of tax credits or other credits towards public administrations for which ninety years have passed days after formal notice, for a total amount which, when offset against debts, determines the failure to exceed the thresholds that led to the report.

With this provision, we wanted to prevent companies in (apparent) difficulties due to non-payment from public debtors having to suffer further prejudicial consequences due to the time required for settlement and payment procedures. The statutory auditors or the assessor, assuming responsibility for them, will thus be able to certify the existence of even non-definitively ascertained credits, when for example the obstacles to verification and payment are of a purely formal order or derive from spurious claims or limited only to one part of the amount the entrepreneur assumes is owed to him.

It is expected, however, that the attestation can only be used in the proceedings before the OCRI and therefore, for example, it cannot be a title to obtain a payment order. In acceptance of a suggestion by the Council of State, it was specified that the documents concerning the credits examined by the supervisory body or the professional for the purposes of certification must be attached to the attestation and that the same usability limits apply to them.

Paragraph 4 establishes that if, instead, the evaluation of the acquired data confirms the existence of well-founded indications of crisis, the college identifies with the debtor the measures that appear suitable for overcoming it, setting a deadline within which the entrepreneur must report regarding its implementation.

At the end of the term, if the debtor has not complied and, therefore, he has not taken the necessary initiatives, the college draws up a brief report and transmits it to the contact person, who informs those who made the report. The qualified public subjects are exempted from the reporting obligation in the event that the debtor has presented the request for assisted settlement of the crisis, until the proceeding remains open.

Below is a schematic view of the debtor hearing phase and the possible outcomes of the debtor.

The process of assisted settlement of the crisis


1. Introduction

While the alert procedure is aimed at promptly bringing out the crisis of the company, seeking, with the help of the supervisory bodies or of the OCRI itself and without involving the creditors, a solution to the crisis mainly through the adoption of reorganization measures of the entrepreneurial activity, different is the perspective of the institution of assisted settlement of the crisis , within which, assuming that debt restructuring is essential, the solution is sought through negotiations with creditors, favored by the intervention of the OCRI that – in this case – it acts as a sort of active mediator between the parties.

2. The composition of the crisis

With regard to the activation of the assisted settlement process of the crisis, the art. 19 CCI provides that the only person entitled to initiate it is represented by the debtor, who can address the request for intervention to the OCR to the outcome of the hearing pursuant to art. 18 CCI, but possibly even earlier and regardless of the same.

Upon receipt of the request, the OCRI contact person (identified in accordance with Article 16, paragraph 3, CCI) shall appoint the college of experts referred to in art. 17 CCI.

Once established, the college fixes to the debtor a term not exceeding three months to be used to search for a solution agreed with the creditors and assigns the individual identified as a “supervisor” within the college pursuant to art. 17 to follow the negotiations.

The initial three-month term can be extended up to a maximum of a further three months only in the event of positive feedback from the negotiations.

In the shortest possible time, the college must obtain from the debtor an updated report on the economic and financial situation of the company and a list of creditors and holders of real and personal rights, with an indication of the amount of the receivables and any causes of pre-emption; alternatively the art. 19 CCI provides that – at the request of the debtor – the board may be called to arrange itself to draw up the updated report on the balance sheet, possibly dividing the tasks among its members according to the different skills.

As specified in the accompanying Report, the reason for the acquisition of this documentation is explained by the opportunity to have all the cognitive elements useful for assessing the situation of the company and to identify the possible object of the negotiations, but also in order to pre-establish the documentation necessary for access to a bankruptcy procedure.

Without prejudice to the foregoing art. 19 CCI also provides that in the event that the debtor declares that he wishes to file an application for approval of debt restructuring agreements or the opening of the arrangement with creditors, the board must proceed with attesting the truthfulness of the company data.

It provides the last paragraph that if, at the end of the negotiations, the debtor reaches an agreement with the creditors, this agreement must be formalized in writing and deposited with the OCRI.

The discipline referred to in art. 19 CCI outlines a regime of maximum confidentiality with regard to the content of the agreement, an agreement that (i) cannot be made available for consultation by subjects other than those who have signed it and (ii) it can only be filed with the Companies Registry with the consent of the participating creditors.

No indication – and therefore, it is believed, no limitation – is provided by the legislator with reference to the content of the agreement between the debtor and the creditor class. It follows that the debtor will be free to determine not only the content of the agreement, but also the number of creditors concerned by the same. The only element that must necessarily characterize the agreement would seem to be the suitability of the same to determine the overcoming of the business crisis .

Unlike what happens in the context of the restructuring agreements pursuant to art. 56 CCI (now governed by Article 67 of the Bankruptcy Law) it is not expected that the feasibility of the underlying business plan with the creditors agreement should in any way be verified by a professional (independent).

This circumstance seems relevant if we consider that the agreement reached in this context with the creditors has the same effectiveness as the agreements that implement the recovery plan as per art. 56 ICC, with the consequent corollaries in terms of exemption from the revocatory in case of subsequent judicial liquidation.

The accompanying report to the art. 19 CCI states that the ” obvious assumption of this benefit [the revocation exemption of the acts performed in execution of the agreement] is that the agreement has been reached with the supervision and approval of the college, which, therefore, indirectly guarantee the feasibility of the plan underlying the agreement “.

On closer inspection, however, what is defined by the accompanying Report as a ” clear assumption ” of the benefits recognized by art. 19 CCI last paragraph is thus not clearly formalized in the legislative text. This circumstance seems to be worthy of attention even more so considering the fact that in the procedural context outlined by the art. 19 CCI is not envisaged – except for the possible granting of protective measures pursuant to art. 20 ICC – the intervention of the judicial authority.

In the absence of a (desirable) clarification intervention on this point by the legislator, it will be the practice adopted by the bodies of composition of the crisis to trace a way of managing the differences of views that should emerge between the OCRI and the debtor (and hypothetically the creditors) – or within the same college of experts – in relation to the actual functionality of the agreement with respect to overcoming the business crisis. Just as the exact determination of the responsibilities borne by the expert panel due to the role of ” guarantor of the feasibility of the plan ” that the accompanying Report would implicitly give to the same will be remitted to the future jurisprudential elaboration.

3. The conclusion of the assisted settlement process of the crisis


At present the art. 21 ICC limits itself to providing that if – at the end of the three-month period, as eventually extended – “an agreement has not been concluded with the creditors and a crisis situation remains” the expert panel will have to invite the debtor to submit a request for access to an insolvency procedure (be it a debt restructuring agreement, an arrangement with creditors or a judicial liquidation) within thirty days.

In a perspective of procedural economy and containment of time it is envisaged that the debtor can use, for the purpose of initiating the insolvency procedure, the report on the patrimonial, economic and financial situation of the company and the list of creditors eventually predisposed and attested, from the point of view of truthfulness, from the college of experts.