Italian legislative amendments promote rescue over liquidation for companies facing insolvency, in line with this year’s European Commission recommendation.

Italian lawmakers have passed two decrees which will provide welcome relief to distressed companies, promoting rescue over liquidation and bankruptcy proceedings by early intervention. The Law Decree dated 23 December 2013, No. 145, converted into law of 21 February 2014, No. 9 (the Decree), and (ii) the Law Decree of June 24, 2014, published on the Official Gazette No. 144 of June 24, 2014 (the Growth Decree) amending, inter alia, Royal Decree No. 267 of 16 march 1942 (the Bankruptcy Law) include the following changes:

• An amendment to the super-seniority regime of debts created in connection with a petition for the reservation of pre-bankruptcy agreement

• Pre-emption rights in favour of the employees of the debtor in case of sale or lease of the distressed businesses

• The possibility for a debtor under a pre-bankruptcy agreement with a going concern (concordato in continuità) to obtain the competent court authorization to participate to public tender procedures

• Amendments to the procedure of extraordinary administration applicable to large businesses.