Directors' Duties—An Italian Overview: Tough Decisions Amid COVID-19 Emergency Legislation

Italian COVID-19 legislation, with the aim of keeping companies alive by providing them with a short-term alternative to dissolution, provides for the suspension of (i) certain directors' obligations triggered by substantial corporate capital losses, and (ii) the possibility, until June 30, 2020, to file for the opening of new bankruptcy proceedings. However, these exceptional remedies have not been paired with an equally remodeled liabilities regime. As such, directors are left with no clear guidance for managing a distressed company in these times of unprecedented troubles. They are, in fact, confronted with the tough decision whether to take advantage of the COVID-19 measures and carry on the corporate activity even if the company is undoubtedly in distress, or cease the corporate business to avoid future and possibly more severe liabilities for not having taken the necessary remedial measures. The only viable option for directors―in lack of both reliable data (not distorted by the current emergency and governmental lockdown measures) and reasonable prospects for the future business of the company―is thus adopting a short-term management strategy based on the constant monitoring of the company's conditions and the achievement of close-set objectives.

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