Italian Supreme Court Draws On CERIL COVID-19 Statement
On 14 July 2020 the Italian Supreme Court published its statement on substantive regulatory changes in anti-COVID-19 emergency law in contractual and insolvency matters. The Supreme Court highlights the recommendations that were made in the CERIL Executive Statement 2020-1 on COVID-19 and insolvency legislation. In addressing ‘emergency’ legislation for companies in a financial crisis, it points out the guidance provided in this recent CERIL Executive Statement.
CERIL Executive Statement
Earlier this year, the CERIL Executive Statement 2020-1 on COVID-19 and insolvency legislation was published. The statement was prepared by Prof. Stephan Madaus (Halle-Wittenberg) and Prof. Em. Bob Wessels (University of Leiden) (Reporters), assisted by Gert-Jan Boon (Associate Researcher), in addition to the other members of the Executive. With the COVID-19 (corona) virus reaching pandemic status, CERIL took note of the devastating effects that the healthcare measures have on businesses. The CERIL Executive calls upon EU and European national legislators to take immediate action and adapt insolvency legislations where necessary in light of the current extraordinary economic situation and to prevent unnecessary bankruptcies of entrepreneurs.
The CERIL Executive Statement was welcomed across Europe and beyond, as evidenced, for instance, by the publications that followed at the Oxford Business Law Blog, Il Caso, Global Restructuring Review, Zeitschrift fur Insolvenzrecht und Kreditschutz, Harvard Bankuptcy Round Table, and now by the Italian Supreme Court.
Addressing companies in crisis due to COVID-19
The Supreme Court elaborates on the contractual and insolvency matters in an extensive statement focussing on the Italian context. In addressing the emergency rules for companies in a crisis, as a consequence of the COVID-19 outbreak, the Supreme Court states the following, relating the CERIL Executive Statement (freely translated, with thanks to Giorgio Corno, member of CERIL’s Executive):
‘A strong recommendation was delivered to European legislators by the Executive Committee of CERIL (Conference of European Restructuring and Insolvency Law), which on 20 March 2020 conveyed on its website concerns about the suitability of European legislation and that of individual nation states to face a new and unexpected crisis, calling for the adoption of measures suspending obligations and deadlines for the submission of applications for access to insolvency proceedings, with relative irresponsibility of entrepreneurs, regardless of the actual evidence of the dependence of the state of crisis on the extraordinary situation in progress. The document highlights the need to tackle the liquidity crisis, not only with direct interventions also in derogation from the general prohibition of state aid, i.e. through the extraordinary purchase of securities by the ECB, but also with a general moratorium on enforcement actions against insolvent companies.’
For the full text of the Supreme Court’s statement, see here.
For the CERIL Executive Statement 2020-1 on COVID-19 and insolvency legislation, see here.