What is Over-indebtedness?
This legislation offers non-bankrupt debtors a structured way to restructure and liquidate their debts in a coordinated manner, aiming at debt relief through the approval of specific procedures or through controlled liquidation.
The Corporate Crisis and Insolvency Code (CCII) has updated and restructured these tools by inserting them into Title IV, called "Crisis regulation tools", and placing controlled liquidation in a separate Title, V, dedicated to judicial liquidation.
Over-indebtedness refers to the condition of crisis or insolvency of subjects such as consumers, professionals, small and agricultural entrepreneurs, innovative start-ups (DL 179/2012 converted with L. 221/2012) and other debtors not subject to judicial or administrative liquidation.
Tools for the solution
1) Consumer Debt Restructuring
The CCII replaced the consumer plan, renaming it " restructuring of consumer debts " and including it among the "Crisis regulation tools".
Access to the instrument is permitted only to those who have assumed obligations exclusively for purposes other than business or professional activity, and are effectively defined as consumers:
«the natural person who acts for purposes other than any entrepreneurial, commercial, artisanal or professional activity carried out, even if a member of one of the companies belonging to one of the types regulated in Chapters III, IV and VI of Title V of Book V of the Civil Code, for debts other than those of the company».
The procedure for restructuring consumer debts is characterized by:
- from being reserved only to the latter, who asks the judge to approve a plan with free content;
- from excluding the vote of creditors;
- from the debtor's deserving condition;
- from the latter not having previously benefited from debt relief in the last five years or twice.
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2) Minor Concordat
The minor concordat is reserved for non-bankrupt subjects who have accumulated debts deriving from entrepreneurial or professional activities. This procedure, similar to the preventive concordat, requires:
- approval of the proposal by a qualified majority of creditors (60% of eligible credits);
- binding effect even for dissenting creditors;
- preferential orientation towards the continuity of entrepreneurial or professional activity;
- offering an alternative and more convenient solution than controlled liquidation.
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3) Controlled liquidation
The controlled liquidation is intended for the monetization of the assets of debtors not subject to judicial liquidation (consumers, professionals, small and agricultural entrepreneurs). It provides for:
- the conversion of the debtor's assets into cash, entrusted to a liquidator;
- immediate blocking of individual enforcement and precautionary actions by creditors prior to the opening of the procedure;
- legitimacy to request the opening of the procedure by the debtor, the creditors (in the presence of pending enforcement proceedings) or the public prosecutor (in the event of business insolvency).
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4) Debt relief for the insolvent over-indebted person
A significant innovation is the possibility of debt relief for the insolvent over-indebted , granted to deserving natural person debtors who are not able to offer any immediate or future benefit to creditors. This measure aims to:
- offer a "second chance" to individuals with no prospects of economic recovery;
- promote their social and economic reintegration;
- ensure the essential maintenance of the debtor's family;
- possibility of granting only once;
- obligation to repay debts, if significant financial resources arise within four years of debt relief (excluding any financing received), for a minimum percentage of 10%.
