In English law, there are several requirements for entering into a legally binding contract: consent, consideration, certainty and completeness, intention to create legal relationships and compliance with formalities. The Legal Commission found that smart legal contracts can meet all these requirements. For example, the first condition of the “agreement” is fulfilled by the renewal of an offer and the acceptance of such an offer. As with traditional contracts, contracting parties are expected to negotiate in natural language or other communications, such as providing and interacting with code, before entering into most smart legal contracts. In any event, the words and conduct of the Contracting Parties shall determine whether there is an offer and acceptance. The Law Commission paper points out that there are still risks to using smart legal contracts – as with traditional contracts – but the current legal framework means that parties and developers have the flexibility to take steps to address these risks. For more information on smart legal contracts and their integration into the current legal framework in England and Wales, see the full Law Commission paper or a summary of the document. This publication is for your convenience and does not constitute legal advice. This publication is protected by copyright. © 2022 White & Case LLP This disclaimer examines the main features of the Insolvency Code that renew the framework set out by the Insolvency Act, focusing on the new instruments available, including the new “Negotiating composition for corporate crisis management (composizione negoziata per la soluzione della crisi d`impresa)” (the “negotiated concentration”)2 (b) the transfer of the company in any form (including by lease) without joint and several liability of the purchaser for debts relating to the activity sold (excluding debts due to employees). The Insolvency Code represents an important step forward, marking the transition to a new chapter for the Italian restructuring and insolvency framework, providing for more cost-effective and effective instruments to deal with an emergency situation in the interest of debtors and creditors, without neglecting the interests of shareholders and other stakeholders.
The Negotiation Agreement allows companies and their advisors to conduct fair negotiations on a possible restructuring with creditors and other stakeholders in a protected environment and under the supervision of an independent expert appointed by the Chamber of Commerce (the “Expert”). The purpose of the negotiation settlement is to find an amicable solution for the restructuring of a company in a situation of “capital imbalance (patrimonial squilibrio)” or “economic and financial imbalance (squilibrio economico-finanziario)” which makes a crisis or insolvency likely, if and to the extent that the restoration of the company is “reasonably feasible (ragionevolmente percorribile)”. A “smart legal contract” is a legally binding contract “in which some or all of the contractual obligations are defined and/or automatically performed by a computer program”. Entrepreneurs are increasingly using new technologies such as distributed ledgers to create smart legal contracts. According to the document, smart legal contracts can transact on cryptocurrency exchanges, facilitate games and the exchange of collectibles between participants in a distributed ledger, and run online gambling programs. Although most of the new rules have not been sufficiently tested in the Italian market, there are signs of a growing awareness of the possibilities offered by the reformed legal framework, in particular as regards more flexible instruments such as the composition of negotiations, which is particularly suitable to facilitate transactions aimed at eventually acquiring companies in difficulty. The Law Commission of England and Wales has published a detailed analysis of the application of existing law to smart legal contracts and concluded that the current legal framework has the potential to facilitate and support the use of smart legal contracts. The Law Commission noted that the jurisdiction of England and Wales “provides an ideal platform for business and innovation without the need for legislative reform”. 1 That decree-law was subsequently amended and supplemented on several occasions, most recently by Legislative Decree No 83 of 17 June 2022, which transposed, inter alia, Directive (EU) 2019/1023 (`the Restructuring and Insolvency Directive`) into the Italian legal framework.
With its entry into force on 15 July 2022, the Insolvency Code replaced Royal Italian Decree No. 267 of 16 March 1942 (the “Bankruptcy Code”). 2 Since the main objective of this call for tenders is to provide a general analysis of the new Italian legal framework for restructuring and insolvency with a view to structuring and carrying out transactions likely to prevent or overcome a crisis or insolvency situation, it does not address the new rules relating to the `liquidazione giudiziale` (`compulsory liquidation`). whose structure, purpose and characteristics correspond essentially to those of bankruptcy proceedings governed by the Bankruptcy Act. 3 That joint procedure is governed by Article 40 et seq. of the Insolvency Code. 4 The debt restructuring agreement is governed by Article 60 et seq. of the Insolvency Code. 5 Such provisions, which had been laid down for the first time by the Insolvency Code before its entry into force, were adopted by Decree-Law No 118 of 24 December.
August 2021 with immediate entry into force also included in the bankruptcy law. 6 This requirement does not apply if there is at least 50% of the corporation`s debt to financial creditors and if forced taxation is imposed only for classes that include non-consenting financial creditors. 7 The composition of creditors is governed by Article 84 et seq. of the Insolvency Code. 8 In each class, the application shall be approved when a majority of the voting claims have been reached or, if not, two-thirds of the claims of the qualified creditors have been approved, provided that the creditors holding at least half of the total claims of the same class have voted. 9 The restructuring plan is governed by Article 64a et seq. of the Insolvency Code. 10 The crisis or insolvency management of group companies is governed by Article 284 et seq. of the Insolvency Code. 11 Although such provisions apply mutatis mutandis to the recovery plan, it is disputed that such group legislation is applicable to the restructuring plan, since they are not mentioned in the relevant provisions. 12 The `liquidation of the judicial group` is governed by Article 287 of the Insolvency Code. The Law Commission also reviewed the interpretation of smart legal contracts, concluding that an appropriate test for interpreting encoded terms in smart legal contracts is what the Law Commission calls the “reasonable coder” test.