Avoiding Bankruptcy in Italy: Preventive Arrangement with Creditors

As a sort of Italian equivalent of US’s Chapter 11, the Preventive Arrangement with Creditors (Concordato Preventivo) is now the main instrument in Italy for small and medium-sized companies (and sometimes large ones) to manage insolvency by avoiding bankruptcy. Through the examination of 60% of the total cases filed at the Court of Milan during the 2005–2014 period, authors investigated the different features of the procedure, the characteristics of the company that adopts it, and its diverse purposes of liquidation or restructuring. The complexity of the Italian system and the novelty of the legislation have made it rather difficult to reach definitive conclusions. However, Preventive Arrangements with Creditors can be considered a more efficient instrument than the alternative bankruptcy, both in terms of timeframe and creditors’ satisfaction. Within the overall European reform process of insolvency proceedings, Italy seems to provide useful insights for other countries in Europe, following in particular the 2014 Recommendation issued by the European Commission.