New pre-insolvency creditor arrangements for Italy

The framework for pre-insolvency creditor arrangements (concordato preventivo) in Italy has been amended to improve the financial and business crisis faced by Italian companies. The new provisions are drawn from US Chapter 11, and the overall reform of the country's pre-insolvency creditor arrangements is aimed at aligning the Italian business environment with other jurisdictions. As with every substantial legal reform, the application of these new rules will require some analysis until market practice is established based on the parameters established by the Italian courts. On June 15 2012, the Italian Government (Consiglio dei Ministri) approved Law Decree No 83 (Development Decree) to introduce certain urgent measures aimed at the growth and development of Italy's economy. The Development Decree was successively amended and converted into law through the approval of Law No 134 on August 7 2012. Among the various innovations introduced by the Development Decree to face the effects of the economic downturn are the amendments to insolvency proceedings under the Italian Bankruptcy Law.