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Alert Measures in the Time of Coronavirus

Since the issue of the new rules of the Crisis Code (Legislative Decree no. 14/2019), there have been tight criticisms of the institutions for alerting and assisting the composition of the crisis, criticisms that have developed in several directions: the clumsiness and complexity of the system, the costs that the company already in crisis has to bear (ie the pre-deduction fees for the members of the OCRI), the negative "advertising" that the start of a procedure with the intervention of an external entity can generate and, above all, the circumstance that in case of failure of the assisted settlement tools of the crisis, the company ends up, so to speak, on the public prosecutor's table, opening the doors to judicial liquidation. European principles, above all, those that emerge from Directive 2019/1023, favor - instead - an approach to alert tools that are more at the company's exclusive service: in identifying solutions and providing assistance.

The pressing on the legislator, since the issue of the Crisis Code and in view of the entry into force of the relevant provisions (15 August 2020), to introduce adjustments to these new institutions has already produced results.

Firstly, action was taken on the new art. 2477 of the Italian Civil Code (modified by art. 379 of the Crisis Code): the rule provided for the mandatory appointment in the s.r.l. by the control body or by the auditor upon exceeding some dimensional thresholds which appeared immediately very low (it would have been sufficient to have exceeded for two consecutive financial years even one of the following three limits: a) assets above 2 million EUR; b) revenues in excess of € 2 million; c) employees employed on average in the year exceeding 10 units); it is clear that the expansion of the base of limited liability companies (the srls - according to ISTAT data from 2017 - are 885,707, representing 53% of the companies with corporate form and 97% of the capital companies) that should have been obliged to equip themselves of a control body or an auditor would have paralleled - concretely - the area of ​​the companies subject to internal alert which, as we have seen, is based on the presence, in fact, of the corporate control body or the auditor. Article. 2 bis of the law of 14 June 2019, no. 55 (of conversion of the legislative decree of 18 April 2019, n. 32) has raised the dimensional thresholds provided for by art. 2477 of the Italian Civil Code exceeding which is now mandatory in the s.r.l. the appointment of the control body (or auditor) bringing the asset and revenue threshold above 4 million euros and the number of employees employed on average during the year to more than 20 units.

The draft corrective decree to the Crisis Code, approved by the Council of Ministers on February 13, 2020, then established art. 41 that the reporting obligations under art. 14, 2nd paragraph (i.e. the one coming from the corporate control body or the auditor and directed towards the OCRI) and by art. 15 (i.e. those of qualified creditors regarding the relevant debt exposures) operated only from February 15, 2021 for companies that in the last two financial years had not exceeded any of the following limits: asset assets or revenues above 4 million or employees employed in the exercise to a greater extent than 20 units (i.e. the same dimensional limits that today in the srl - pursuant to art. 2477 of the civil code - make the appointment of the corporate control body or auditor mandatory).

The rule provided in the draft corrective decree must, however, be considered outdated by art. 11 of the legislative decree March 2, 2020, n. 9 ("Urgent measures for families, workers and businesses related to the epidemiological emergency from COVID-19") which expressly states that "the reporting obligation pursuant to articles 14, 2nd paragraph, and 15 of the Crisis Code operates from 15 February 2021 ". And it is this latter provision that focuses on the following observations.

Firstly, it is necessary to dwell on the rationale of the new provision; in all probability it was intended not to further tire the production system with a novelty that could have accelerated, in some way, the company crisis in a period in which the health emergency had and will have heavy repercussions at least in the short and medium term on the keeping of our business system.

In any case, it should be noted that the entry into force of the overall regulatory framework for the alert and the assisted settlement of the crisis has not been postponed tout court.

The assisted settlement procedure before the OCRI is activated, in fact, not only following the reporting of the control bodies (or auditor) or qualified creditors, but also upon the request of the same debtor, pursuant to the combined provisions of the art. 17, 1st paragraph, and 19, 1st paragraph, of the Crisis Code; therefore, if the company in crisis deems to avail itself of the support of OCRI, it can do so without the need to be pushed in this direction by the signaling of the indicated subjects.

But recourse to OCRI, in the period from 15 August 2020 to 15 February 2021, by the same company in crisis may be "suggested" by the supervisory bodies (or by the auditor): Legislative Decree no. 9/2020 postpones, in fact, the entry into force of the second paragraph of art. 14 of the Crisis Code, but not of the first paragraph. First paragraph that places on the control body (and the auditor) "the obligation to verify that the administrative body constantly evaluates (...) if the organizational structure of the company is adequate, if there is an economic and financial balance , as well as to immediately report to the administrative body the existence of well-founded indications of the crisis ". There is no doubt that it is an obligation qualifying the control activity and that the reporting to the directors cannot remain unheeded by the latter without it can be imagined that, especially for the control body, an obligation is not triggered more general intervention.

For the auditor (or the auditing firm), we cannot currently assume anything other than the report referred to in the first paragraph of art. 14 and this until February 15, 2021, except perhaps imagine a parallel reporting obligation, where appointed, to the supervisory body; for the latter - as was said - it is necessary to take into account the powers at its disposal to "force" the company in crisis to take concrete initiatives (although the obligation to report to OCRI does not exist in the period indicated): on this point it is it is sufficient to observe how by virtue of art. 37, 1st paragraph, of the Crisis Code, the corporate control body is entitled to submit the application for the opening of the judicial liquidation (the former bankruptcy). There is no doubt that, where the report to the directors is not followed by a concrete recovery of the economic and financial balance or timely access to the assisted settlement procedure through the OCRI or to the crisis or insolvency regulation procedures, the the control body may be held responsible for the prejudicial consequences deriving from the delayed opening of a bankruptcy procedure (also in the case of a composition with creditors: just think of art. 115 of the Crisis Code according to which the judicial liquidator, after the approval of the arrangement with creditors, is required to exercise liability actions against corporate bodies, including the control body).

The interpretation suggested here is supported by the provisions of the third paragraph of art. 14: where it is specified that the exemption from liability for the control body (or for the auditor) follows from the reporting of the well-founded indications of the crisis to the directors to which it follows, if within sixty days they are not adopted by the body administrative measures deemed necessary, reporting to OCRI.

Therefore, the period between 15 August 2020 and 15 February 2011 will constitute a very interesting initial test for the OCRI constituents (whose activity will be reduced to that arising from an appeal to them by the same debtor, perhaps "pushed" ”By the control body), but above all for the latter, which will have to supervise the economic and financial equilibrium as of 15 August 2020 and, even before that, on an adequate organizational structure of the company that allows the timely detection of the crisis.

I wonder if the emergency legislator, perhaps in the conversion phase of the legislative decree n. 9/2020, can no longer appropriately delay the entry into force of art. 22 of the Crisis Code which, as we have seen, brings to the public prosecutor's table the news of the crisis not resolved by the company or even more appropriately repeal art. 22, assigning - as hoped by many - to the assisted settlement procedure of the crisis its function more coherent with European principles and less penalizing for the business system.

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Maurizio Irrera's picture

Full Professor of Commercial Law at the University of Turin.

He lectures on corporate and commercial law at conferences, conventions and study meetings.

He is the author of over 100 scientific articles, monographs, essays, encyclopaedia entries, articles and comments on judgements on matters of commercial, corporate and insolvency law.