The Digitorney Crisis Navigator
Covid-19 in Italy:
Legal Framework for Companies
The Corona Crisis leads worldwide to critical situations for companies. In light of this, Digitorney has asked lawyers from various countries specialized in restructuring law for recommendations on what needs to be done and which solutions are at hand to weather the Corona Crisis. This part of our series focuses on Italy.
Kathleen Lemmens, lawyer and partner at Gianni, Origoni, Grippo, Cappelli & Partners based in Milan gives more colour on this topic for our “Digitorney Crisis Navigator”.
Insolvency Law
When does a company need to file for insolvency in Italy?
Insolvency and bankruptcy of Italian businesses and entrepreneurs are regulated under Law 16 March 1942, No. 267, as subsequently amended from time to time (the “Italian Bankruptcy Law”). According to the Italian Bankruptcy Law, a debtor must file for bankruptcy when it is insolvent, i.e. when it finds itself in a permanent and irreversible financial distress, and not just in a temporary and reversible crisis.
Insolvency exists when a debtor persistently fails to pay its debts and fulfill its obligations on a regular basis when they fall due. Bankruptcy may also be declared at the request of a creditor or public prosecutor (usually in connection with bankruptcy crimes). In both cases the applicant must prove the debtor’s insolvency. >> READ MORE
Directors’ Liability
What liability risks exist in Italy in a corporate crisis?
All operating companies in Italy are in their own way affected by the Covid-19 pandemic. In this context, directors are faced with great responsibilities, often new and in any event unexpected. From a legal point of view, businesses must, among other things (i) comply with the rules issued by the relevant authorities in connection with the Covid-19 pandemic,
(ii) implement appropriate health and safety rules at the workplace, (iii) decide whether to suspend or continue business, if permitted to do so and in that case determine the scope of the permitted activities, and (iv) manage employees and consultants. >> READ MORE
State Aid
Is there any public support for distressed companies in Italy?
The Italian government has adopted, in March 2020, the Cure Italy Decree and, in April 2020, the Liquidity Decree to provide support to liquidity and financing for Italian businesses and households who suffered losses as a result of the COVID 19 pandemic.
In particular, the Cure Italy Decree, in force since 18 March 2020, provides for the strengthening of the system of economic shock absorbers (i.e. the wage guarantee funds – Cassa Integrazione Guadagni and wage integration funds Fondo Integrazione Salariale) to finance unemployment…
>> READ MORE
Ad hoc solutions
What should an Italian company do in light of the Corona crisis?
The management of a company in Italy should adopt all the necessary precautionary measures to contain the risks associated with the pandemic, and in particular comply with the rules concerning the continuation or suspension of the activity, and health and safety at the workplace.
In particular, as far as health and safety rules are concerned, in addition to any other measures applicable to the business concerned, employers must comply with the provisions of the Shared Protocol on the containment of the COVID-19 risk in the workplace… >> READ MORE
