Ardagh Glass Finance plc - Irish Stock Exchange

Italy
Ardagh Glass S.r.l., one of the Subsidiary Guarantors, is incorporated under the laws of Italy and
may be subject to Italian laws governing creditors rights and bankruptcy and restructuring proceedings.
Bankruptcy Law—Insolvency
Italian creditors’ rights and insolvency laws are generally considered to be more favorable to
debtors than the regimes of certain other jurisdictions, such as the United States. In Italy, the courts
play a central role in the insolvency process and out-of-court restructurings are possible under certain
conditions but infrequent. The two primary aims of the Italian regime are first, to maintain
employment, and second, to liquidate the debtor’s assets for the satisfaction of creditors. These
competing aims often have been balanced by the sale and/or lease of businesses as going concerns and
ensuring that employees are transferred along with the businesses being sold and/or leased.
Under Italian law, the state of insolvency (‘‘insolvenza’’) of a company must be determined and
declared by a court. Insolvency occurs at a time when a debtor is no longer able to regularly meet its
obligations as they fall due. This must be a permanent, and not a temporary, status.
Unlike jurisdictions like the United States, options in Italy to restructure outside the judicial
process are possible under certain conditions but not frequently used. Restructuring generally takes
place through the formal judicial process because of the more favorable conditions for the debtor and
the fact that informal arrangements put in place as a result of a non-judicial restructuring are
vulnerable to being reviewed by a court in the event of a subsequent insolvency and possibly challenged
as voidable transactions.
Prior to, or upon the declaration of insolvency, a company has the option to seek an arrangement
with its creditors (‘‘concordato preventivo’’) under court supervision, in order to avoid a declaration of
bankruptcy and the initiation of liquidation proceedings.
A request to declare a debtor bankrupt and to commence a bankruptcy proceeding (‘‘fallimento’’)
for the liquidation of a debtor can be made by the same debtor, one or more creditors and the
Republic Attorney Office. The request must be approved by the bankruptcy court. Upon the
commencement of a bankruptcy proceeding:
• subject to certain exceptions, all actions of creditors are stayed and creditors must file claims
within a defined period;
• the administration of the debtor and the management of its assets pass from the debtor to the
receiver; and
• any act (including payments) made by the debtor, other than those made through the receiver,
after a declaration of bankruptcy with respect to the creditors is ineffective.
The bankruptcy proceeding is carried out and supervised by a court appointed receiver, a deputy
judge and a creditors committee. The receiver is not a representative of the creditors and the creditors
committee, as specifically provided for by law, has in some cases, an authorization power over the
receiver and, in general, consultation functions over the latter and vigilance authority over the
bankruptcy proceedings. The receiver is responsible for the liquidation of the assets of the debtor for
the satisfaction of creditors. The proceeds from the liquidation are distributed in accordance with
statutory priority. The liquidation of a debtor can take a considerable amount of time, particularly in
cases where the debtor’s assets include real property. Italian law provides for priority to the payment of
certain preferential creditors, including employees and the Italian judicial and social security authorities
and treasury.
182