Liquidity Decree Enacted: Measures Relevant for the Financial System and Italian Enterprises

The Liquidity Decree introduces the following additional measures to support companies affected by COVID-19:

Granting of New Financing to Enterprises

The Italian State will issue guarantees for an amount up to EUR 200 billion―through SACE S.p.A. ("SACE")―in favor of (Italian and foreign) banks, financial intermediaries, and other entities entitled to lend in Italy, which will grant financings (in any technical form) to Italian enterprises.

The guarantee will cover up to 70% or 90% of the relevant financing (depending on the size of the borrower) and is subject to certain conditions, including:

• the issuance of the guarantee by no later than December 31, 2020, and for financings having a term of up to six years, with borrowers able to benefit from an up-to-24-months pre-amortization period;
• the absence of borrower's exposure classified as non-practicing entities as of December 31, 2020;
• for a prohibition on borrowers (and their Italian affiliates) distributing dividends or to buy back their own shares up to December 31, 2020;
• the proceeds must be used to cover employment costs and investments and/or fund working capital relating to business (productive) and entrepreneurial activities in Italy as certified by the legal representative of the borrower; and 
• the relevant financing will increase the overall indebtedness of the borrower (i.e., no refinancing of existing exposures at better conditions).

The Italian State's guarantees will be express, unconditional, irrevocable, and will cover principal, interests, and other costs/expenses connected with the relevant financings (except for the fee payable by the relevant enterprises to SACE).

Extension of Gasparrini and SMEs Funds

Both the Gasparrini and SMEs Fund―already expanded under the Cura Italia Decree to allow suspension of payments due under, respectively, residential and SMEs loans―have been further expanded as follows:

• in the case of the Gasparrini Fund, to individual enterprises and artisans; and 
• in the case of the SMEs Fund, to professionals and companies with no more than 499 employees.

State Guarantee of Cassa Depositi e Prestiti S.p.A. ("CDP") Exposures

State guarantees can be granted by a ministerial decree in respect of CDP's exposures on or prior to December 31, 2020, arising from guarantees on portfolios of exposures originated by banks and other entities authorized to lend to Italian enterprises impacted by the COVID-19 crisis.

Italian Export and Internalization of the Italian (Productive) Business

The Italian State will act as co-insurer to support Italian export and internalization of Italian (productive) business. Notably, the Italian State will co-insure insurance undertakings of SACE for an amount up to 90% thereof.

Temporary Relief of Certain Transparency Measures

Until the end of the COVID-19 emergency, certain transparency requirements applicable to new banking contracts between banks/financial intermediaries and customers are temporarily suspended/mitigated to reduce operational burden and easing completion of new transactions.

Business Continuity and Insolvency Proceedings

Due to the COVID-19 emergency, the Liquidity Decree provides that:

• the events triggering the statutory reduction of the stated capital are frozen until December 31, 2020;
• new shareholders' loans granted until December 31, 2020, will not be subject to mandatory subordination in case of subsequent bankruptcy declaration of the relevant company;
• save for limited exceptions, the opening of insolvency proceedings is suspended up to June 30, 2020; 
• the entire COVID-19 emergency period shall not be taken into account for the purpose of calculating the terms applicable for commencement of claw-back actions;
• the terms for the fulfilment of payment obligations scheduled between February 23, 2020, and December 31, 2021, under outstanding debt restructuring agreements and similar proceedings (already approved by the relevant court) will be mandatorily extended for six months;
• debtors with debt restructuring agreements/similar proceedings, pending court's approval, may ask the court to: (i) grant a term (no longer than 90 days) for the submission of a new restructuring plan and (ii) take in consideration, for the final approval of the plan, new terms for the payment obligations which cannot be postponed for more than six months; and
• the entry into force of the new Italian insolvency code is postponed to September 1, 2021.

Entry Into in Force of the Decree

The final text of the Liquidity Decree was enacted and published on April 8, 2020, and is subject to amendments by the Italian Parliament during its conversion into law, provided that if any provision does not become law within 60 days from the Liquidity Decree's publication, then it will be deemed to have had no force or effect at all.