The Italian negotiated settlement of a business crisis - How companies move forward in time of financial distress

The enactment of the Code of Business Crisis and Insolvency (Legislative Decree no. 14/2019) brought about a significant paradigm shift in the Italian legal landscape, prioritizing business going concern over companies’ liquidation. The present master’s thesis provides a comprehensive analysis of negotiated settlement (Composizione Negoziata della Crisi) of a business crisis, as it represents the very element of change in Italian jurisdiction and business crisis law, regarding instruments for voluntary corporate restructuring that are foreseen by the CCII (Business Crisis and Insolvency Code). The aim of this research is to illustrate how Composizione Negoziata della Crisi, as an out of court procedure, empowers the entrepreneur to promptly coordinate early actions for the resolution of a financial distress such as crisis or a looming over insolvency. Thanks to this new framework, the debtor may implement strategic solutions before the financial disequilibrium becomes irreversible. Specifically, the study treats technical restructuring activities which are possible due to the new provisions of CCII, specifically focusing on standstill agreements and the transfer of a business unit. These mechanisms are evaluated as relevant instruments to respectively stabilize cash flows on one hand, and gain liquidity on the other hand, in order to preserve the company's going concern while shielding key operating assets of the enterprise. Ultimately, the dissertation demonstrates that negotiated settlement is not merely a procedural requirement but a process, which is aimed at freezing the firm’s position to plan the steps for a recovery. Therefore, Composizione Negoziata della Crisi, as also the Insolvency Directive, fosters a culture of prevention, prompting timely turnarounds that safeguards stakeholders' interests and ensures economic activities, with their ups and downs, are able to remain financially sound on a long-term basis.