Corporate
Crisis and Insolvency

Corporate Crisis and Insolvency, what is it and what does it entail

The new Corporate Crisis and Insolvency Code officially came into effect on July 15, 2022. Its enactment marks the Italian legislature’s adoption of the European principles outlined in the EU Insolvency Directive. The entry into force of Legislative Decree No. 14/2019 was delayed by nearly two years, primarily due to the economic repercussions of the pandemic crisis. Implementing the provisions of the Crisis Code, as initially planned, within a severely weakened economic environment, would have expanded the scope of potential beneficiaries of the measures.

The novelties introduced by
the Corporate Crisis and Insolvency

New Organizational Structures

The new framework introduces the concept of adequacy of measures for individual undertakings and organizational arrangements for companies, implemented in response to the early detection of a corporate crisis.

Negotiated settlement

The alert instruments have been replaced by the regulation of negotiated settlements and the internal reporting system (comprising three types of indicators) and external reporting (involving four types of qualified public creditors).

Corporate Crisis Specialist

The crisis code also introduces the new role of an external expert in crisis and reorganization matters, who assists the entrepreneur in the negotiated settlement process.

New simplified arrangement

For the liquidation of assets and restructuring plans, there are out-of-court mechanisms in place to facilitate agreements between the entrepreneur and third parties.

Corporate Crisis and Insolvency,
a comprehensive solution for businesses and accountants

In the management software Mexal and Passcom, a model for periodic checks aimed at detecting a state of crisis is available. This model, integrated into the regular functionality of the management software and fueled by the same database, allows for the analysis of all the indicators specified by the Crisis Code, especially:

Indicators for internal warning signals;
Indicators for external warning signals from Qualified Public Creditors
Indicators for debt sustainability in the next 12 months;
Other indicators to assess potential business imbalances (economic, financial, and equity-related).

The module also enables you to perform a practical test to gain access to the Negotiated Crisis Composition process. This test allows for an initial assessment of the recovery’s complexity, as expressed by the ratio of the debt amount to be restructured compared to the annual free cash flows that can be serviced.

Functions for the periodic and timely identification of well-founded signs of a crisis are available in both Mexal and Passcom

enterprises – industry – services

accountants – tax advisors

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CorporateCrisis and Insolvency