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Italy: New Decree-Law to Ensure Liquidity for Distressed Companies Enters into Effect

(Apr. 21, 2020) On April 9, 2020, Decree-Law No. 23 (D.L. No. 23), which guarantees liquidity for companies in distress as a result of the coronavirus emergency, entered into effect in Italy (Misure Urgenti in Materia di Accesso al Credito e di Adempimenti Fiscali per le Imprese, di Poteri Speciali nei Settori Strategici, nonche’ Interventi in Materia di Salute e Lavoro, di Proroga di Termini Amministrativi e Processuali.)

Temporary Measures to Ensure Liquidity of Companies

To ensure the liquidity of Italy-based companies affected by the COVID-19 pandemic, SACE S.p.A., the Italian Export Credit Agency, is authorized to provide guarantees to ensure their liquidity until December 31, 2020. Entities provided assistance under the measure include banks and other financial entities authorized to perform credit operations in Italy. The maximum amount SACE can provide under this guarantee is 200 billion euros (about US$217.4 billion), of which at least 30 billion is to support small- and medium-sized enterprises, including self-employed workers. (Art. 1(1).)

The issuance of guarantees covering loans in favor of companies with fewer than 5,000 employees in Italy and with a billing annual value of less than 1.5 billion euros (about US$1.6 billion) is subject to a simplified procedure. (Art. 1(6).)

Measures to Support Exports and Investment

SACE’s new powers are designed to foster its role of promoting the internationalization of the Italian production sector in order to increase employment levels and improve other aspects of the country’s economic system. (Art. 2(1)(a).) SACE is to manage the funds appropriated by this legislation, which is to operate according to adequate prudential risk management standards. (Art. 2(1)(b) § 4).) The legislation also establishes the Public Financial Support Committee for Exports at the Ministry of Economy and Finance to provide financial assistance to exports. (Art. 2(1)(l) § 1).) Together with Cassa Depositi e Prestiti S.p.A. (Italian Investment Bank), SACE is to approve industrial and commercial strategies to increase the effectiveness of the support system for exports and the internationalization of companies in order to revitalize the economy. (Art. 3(1).)

Other Simplified Procedures for Companies

The legislation also includes provisions allowing businesses operating during the state of emergency to conclude contracts digitally, provided that certain technological protocols are observed. (Art. 4(1).) Other provisions allow for simplified procedures for the dissolution of companies due to reduction of capital (art. 6(1)), preventative agreements in case of bankruptcy and company restructuring (art. 9(1)), and suspension of expiration terms through April 30, 2020, on certain debt instruments (art. 11(1)).

Tax-Related Benefits for Specific Regions of the Country

The legislation suspends the payment of value added tax (VAT), eliminating the application of penalties and interest, for the months of April and May 2020 for businesses in the provinces of Bergamo, Brescia, Cremona, Lodi, and Piacenza whose revenues have decreased at least 33% compared to the same months last year. (Art. 18(6).)

In addition, the legislation creates a tax credit for the purchase of personal protective equipment and other safety devices to protect from exposure to biological agents. (Art. 30(1).)

Suspension of Procedural Terms

Certain procedural time limits established for civil, criminal, administrative, accounting, tax, and military justice proceedings are suspended due to the health emergency. (Art. 36(1).)

Measures Related to Data and Evaluation of Clinical Trials

During the state of emergency, the Italian Medicines Agency (AIFA) is authorized to access all the data of experimental, observational clinical studies and compassionate therapeutic-use programs for patients with COVID-19. (Art. 40(1).) During the same period, the Ethics Committee of the Lazzaro Spallanzani National Institute for Infectious Diseases in Rome is recognized as the only national ethics committee for evaluating clinical trials of human medicines, observational drug studies, and the compassionate therapeutic-use programs for COVID-19 patients. (Art. 40(3).)