Extraordinary Administration

“Amministrazione straordinaria” under Legislative Decree No. 270/1999 and Law No. 39/2004 (converting Law Decree No. 347/2003)

Companies exceeding certain dimensional thresholds are not subject to bankruptcy liquidation, but to the procedure of “amministrazione straordinaria”. In this proceeding the receiver is appointed by the Government and the Government itself has certain powers to approve certain decisions within the proceeding.

The main difference from regular bankruptcy liquidation is that “amministrazione straordinaria” is specifically aimed at continuing and preserving the business, also through a sale of business as a going concern. An Extraordinary Commissioner is appointed to serve as a receiver of the estate and to direct operation of the business. A Monitoring Committee is also appointed, which has a mere consulting role.

Creditors are paid for their credits with the proceeds of the sale of assets or business, unless the proceeding ends up with the Company returning to a state of solvency (which very rarely happens).

The thresholds are the following:

(i)   more than 200 employees and debts exceeding 2/3 of both assets and turnover for the “amministrazione straordinaria” provided by Legislative Decree No. 270/1999;

(ii)  more than 500 employees and debts exceeding euro 300 million for the “amministrazione straordinaria” provided by Law No. 39/2004 (so-called “Marzano Law”).

“Amministrazione straordinaria” takes therefore two different forms, but the second is available only if the Company specifically applies for it. Differences relate mainly on the more incisive powers of the Government to run the proceeding in the “Marzano” version of the proceeding, where the interests of the national economy are considered more relevant and justify that the main decisions are taken by the Government and not by the Court.