mental to the core going concern. Pursuant to article 186-bis of the Italian Bankruptcy Law, two conditions must be met for a pre-insol- vency creditor arrangement with going con- cern to be approved by the court: • submission to the court by the debtor of an admission request containing:
• a detailed forecast of the costs and rev- enues expected from the continuation of the business activity; and
• a detailed indication of the financial resources required for the continuation of the business and the relevant sources; and
• the plan must be certified by an expert who must confirm that the continuation of the business is in the best interest of the creditors. A debtor who has filed a request with
going concern is entitled to apply to the court to be authorised to pay claims arising from the supply of goods or services made prior to its application (article 182 of the Italian Bankruptcy Law). This is subject to a certifi- cation by an expert confirming that such pay- ments are essential for the continuity of the business and in the best interest of the credi- tors. Further, according to article 217-bis of the Italian Bankruptcy Law, the payments and financing authorised by the court pur- suant to article 182-quinquies will be
exempted from criminal law provisions relat- ing to simple bankruptcy (bancarotta sem- plice) and preferential bankruptcy (bancarotta fraudolenta). To better understand the innovative
approach of the reforms, which have improved the existing scheme of Italian Bankruptcy Law, provisions concerning pre-insolvency creditor arrangements must be read in conjunction with new article 182-quinquies of the Italian Bankruptcy Law. A more flexible approach was given to the concept of par condicio creditorum (equal treatment of all the creditors), which is considered the main cornerstone of Italian Bankruptcy Law. New article 182-quinquies of the Italian
Bankruptcy Law provides a new way for dis- tressed companies to enter into new transac- tions aimed at a positive execution of a pre- insolvency creditor arrangement or debt restructuring agreement. Pursuant to this new article the court can authorise the com- pany to: • to raise new funds which, in case of insol- vency, would rank super senior; and
• in case of a pre-insolvency creditor arrangement with going concern, to pay for the supply of goods or services before the court application for the admission to the pre-insolvency creditor arrangement.
In the latter case, this is provided that an independent expert certifies that the payment of these claims is essential for the preservation of the going concern and to assure the best interest of all the creditors. In case the fund- ing is provided on a subordinated basis or without any repayment obligation of the company (ie as a semi-equity injection) the expert certification will be not necessary. It is worth noting that, in accordance with
amended article 182-quinquies of the Italian Bankruptcy Law, super senior ranking is also provided for any financing granted to the company in the framework of the pre-insol- vency creditor arrangement application to the court. This is provided that in authorising such financing, the court expressly specifies for such ranking to apply to it. The rationale of article 182 is to address
common difficulties incurred by companies which intend to carry out pre-insolvency creditor arrangements but lack the necessary financial resources to complete the process. The amendments to the pre-insolvency
creditor arrangements under the Italian Bankruptcy Law provide companies in crisis a more flexible approach to face economic dif- ficulties by giving them a wider range of tools to handle situations of temporary financial distress.
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