The Moratorium Agreement with creditors in Italy
It is a restructuring legal tool for companies facing business crisis risking to become insolvent
Company restructuring law permits to suspend temporary the payment to creditors by agreement
The Moratorium Agreement (La Convenzione di Moratoria)
In the event of a corporate crisis in which a company risks becoming insolvent, since cash flows become inadequate to meet the obligations assumed by the company for the following 12 months, the applicable law (CCII code) also provides for the Moratorium Agreement among the legal tools that the entrepreneur can apply for.
The Moratorium Agreement provides for a temporary suspension on credits with the possibility, under certain conditions, to extend its effects to creditors who are not members of the restructuring agreement.
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In Moratorium Agreement there is not an involvment of court for approval, becuase it is an extragiudicial tool to be agreed by company in business crisis and creditors (often they are banks).
The Moratorium Agreement can be stipulated by the entrepreneur with any category of creditors (including banks or financial intermediaries) and can have as its object:
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- the extension of credit due dates;
- the waiver of actions;
- the suspension of enforcement and conservative actions;
- any other measure that does not involve the waiver of credit.
In order to extend the effects of the Moratorium Agreement to non-member creditors, it is necessary that:
- they are creditors of the same category, with homogeneous legal position and economic interests;
- creditors representing at least 75% of the credits of the category have joined the Moratorium Agreement;
- all creditors belonging to the category are informed of the start of negotiations or put in a position to participate in good faith;
- non-adherent creditors have the agreement and information on the financial situation.
The Moratorium Agreement must be communicated to non-adherent creditors by certified email jointly with the written evaluation report done by a skilled professional (usually an auditor).
Within 30 days from the communication, opposition may be filed before the Court.