Italy

The key insolvency procedures for the liquidation of a company are as follows:

• Judicial liquidation (formerly “bankruptcy”). This procedure is aimed at liquidating the company’s assets to maximise the recovery for the creditors (as a whole, on a par condicio creditorum basis) as compared to the recovery obtainable by each creditor through individual enforcement of their claims. The proceeds arising from the implementation of the liquidation plan are destined for payment of the creditors, pursuant to the order of priority rights provided by the law. Creditors shall file a specific petition seeking for their claims to be included in the statement of liabilities as a requirement to participate in the distribution of the proceeds of the liquidation.
• Compulsory administrative liquidation (liquidazione coatta amministrativa). This procedure is regulated by the Italian Insolvency Code and by other special supplementary provisions applicable to particular types of debtors (mainly regulated entities, banks, insurance companies, and so on). Given the specific nature of these debtors (and the public interest involved in their business), the aim of a compulsory administrative liquidation is to remove from the market and the financial system companies with severe financial problems or serious mismanagement issues. Even though the key target is the public interest, in terms of treatment of creditors, this procedure produces similar effects to judicial liquidation.

In the context of both procedures, a special type of composition of debts is admissible, based on a proposal to be submitted pursuant to the set of provisions provided for each of those respective instruments by the Insolvency Code (concordato nella liquidazione giudiziale).

Finally, the composition with creditors, outlined below, can involve either the continuation of the business or liquidation of the business assets.

Under Italian insolvency law, debtors may seek protection through various legal instruments provided by the Italian Insolvency Code, which entered into force in July 2022. The primary mechanisms include negotiated settlement of business crisis (composizione negoziata della crisi), composition with creditors (concordato preventivo) and debt restructuring agreements (accordi di ristrutturazione dei debiti). Each of these procedures may allow for a stay of enforcement actions, granted or confirmed by the competent court, protecting the debtor’s assets while a restructuring plan is negotiated or implemented.

The nature and scope of such protection differs according to the type of proceedings. For instance, in a composition with creditors, a stay on creditor actions is typically granted by the court once the application is filed at the specific request of the debtor. In a negotiated settlement of business crisis, the stay is automatic if requested by the debtor, but this must be specifically confirmed by the competent court upon specific application to it and for a limited period.

There are various pre-insolvency debtor-in-possession restructuring regimes under Italian law. The most commonly used are:

• negotiated settlement of business crisis;
• composition with creditors;
• recovery plans; and
• debt restructuring agreements.

All of these allow the debtor to reach an agreement on multiple creditors’ claims while maintaining the management of the company and the continuation of the business.

3.1 What are the conditions to entry?

For each of the aforementioned types of procedure, the main conditions depend on the crisis or insolvency situation of the debtor.

According to the Italian Insolvency Code:

• “crisis” refers to a situation that makes insolvency likely and is characterised by the inadequacy of prospective cash flows to meet the debtor’s obligations over the following 12 months; and
• “insolvency” refers to a situation where defaults or other external circumstances indicate that the debtor is no longer able to regularly meet their obligations.

The above-mentioned definitions were introduced by the Italian Insolvency Code, Article 2, paragraphs (a) and (b).

A negotiated composition procedure requires the debtor to file a specific application to the Chamber of Commerce of the district where the debtor has its centre of main interests (COMI). Once filed, the Chamber of Commerce appoints a professional, an “expert” who serves to assist the debtor in initiating and conducting negotiations with the creditors. These are out-of-court proceedings, whereby the intervention of the court occurs only in case the debtor requires the competent court to confirm the protective measures or to grant precautionary measures.

The composition with creditors procedure requires the debtor to file an application to the court of the district where the debtor has their COMI, requiring access to the procedure while filing a proposal for the satisfaction of the creditors and a related restructuring plan. In this application, the percentage of recovery proposed for the creditors and details of the restructuring plan for the turnaround and continuation of the business, or details of the plan for the liquidation of assets must be outlined. If the majority of creditors (who can also be divided into homogeneous classes) approve the proposal and the plan, the composition can be approved by the court.

A debt restructuring agreement requires the debtor to reach an agreement with the creditors that meets the minimum of 60% of the total claims. The agreement is then eligible for approval by the court and becomes effective towards the debtor and the creditors that agreed to it. Creditors not bound by the agreement shall be satisfied in full within 120 days from the judicial approval. (According to Article 61 of the Italian Insolvency Code, there are mechanisms for extending the agreement to the creditors that did not agree to the plan but are in the same category of creditors, had the opportunity to attend the negotiations and have an economic position or an economic interest equal to the adhering creditors.)

Agreement on the execution of a recovery plan is reached entirely out of court. The debtor makes a proposal to the creditors, according to their needs, regarding the execution of an agreement in line with the restructuring plan certified by an expert. The court is not involved and the debtor can decide: (i) the content of the plan; and (ii) which creditors should be involved.

3.2 Can creditor claims be compromised “within a class”?

In the composition with creditors procedure, the debtor may divide creditors into classes, assigning each class a different treatment. However, such classification shall not affect the legitimate pre-emption conditions, given that the relative priority rule applies.

The relative priority rule allows a more flexible approach than the absolute priority rule, as it does not require full satisfaction of senior creditors before junior classes can receive any value under the restructuring plan. Instead, it ensures that the treatment of classes relative to others is fair and consistent with their ranking in insolvency proceedings.

According to the Italian Insolvency Code, the relative priority rule applies to composition with creditors proceedings, in particular, in case of a composition involving the continuation of the business.

The classes are characterised based on homogeneity, both in terms of economic interests and legal position.

Approval of the composition plan requires a double majority: a majority within each class and a majority of the classes.

3.3 Is there a “cross-class cramdown”?

The Italian Insolvency Law, specifically in the court-approved restructuring plan and the composition with creditors procedure, allows for a cross-class cramdown under certain conditions, requiring that:

• the dissenting class is not unfairly prejudiced;
• at least one impaired class has accepted the plan;
• creditors in the dissenting class are treated no worse than in a liquidation scenario;
• the plan respects the priority rule.

In light of the above, according to the Italian Insolvency Code, a restructuring plan within a composition with creditors could be confirmed by the competent court even in the absence of consent from one or more dissenting classes of creditors provided that the following cumulative conditions are met:

• Compliance with the relative priority rule. The restructuring plan shall respect the relative order of priority among classes, meaning that no dissenting class of creditors shall receive less favourable treatment than any junior class.
• The best interest of creditors test. The dissenting class shall not be worse off under the proposed plan than it would be in the event of judicial liquidation (liquidazione giudiziale).
• Approval by at least one affected class. At least one class of creditors with a valid economic interest in the outcome of the proceedings shall have voted in favour of the restructuring plan and shall rank higher than the dissenting classes.

3.4 Can shareholder claims be compromised?

According to the Italian Insolvency Code, if the debtor has commenced insolvency proceedings, the claims arising from shareholder loans to the insolvent company are satisfied only after all higher-ranking creditors have been paid in full.

3.5 Can secured creditors’ claims be compromised? Are deficiency claims treated differently?

Secured credits retain their privileged nature even in pre-insolvency or insolvency proceedings and also in the case of debtor-in-possession restructuring regimes. However, in order to facilitate the restructuring of the debt, the relative priority rule may apply in certain situations instead of the absolute priority rule. For instance, in the composition with creditors, it is possible for the debtor to offer to the class of secured creditors, which ranks higher, a less than full satisfaction, provided that they received no less than any lower-ranking class (e.g. a class of unsecured creditors).

Moreover, the minimum value to be allocated to secured creditors is determined based on what they would obtain from the liquidation of the asset securing the claim, calculated at its market value (i.e. the “secured portion” of the claim). The residual part would be treated as an unsecured claim.

3.6 Can creditors propose competing plans?

The plan is typically proposed by the debtor, although creditors may negotiate its terms.

However, in composition with creditors proceedings, those creditors representing at least 10% of the claims admitted to vote may submit competing proposals, following the filing of the debtor’s plan. The competing proposal shall be complete, including a restructuring plan, a proposal for the satisfaction of claims, and an expert’s feasibility opinion, and shall be accompanied by a security deposit to cover procedural costs. The aim is to promote more favourable solutions for creditors by introducing competition among alternative plans.

3.7 What level of court or other third-party supervision is there of the process(es)?

Judicial oversight varies from procedure to procedure. The negotiated composition procedure involves minimal court intervention, which is limited to authorising and confirming precautionary and protective measures upon the request of the debtor. Unless the debtor requests it, the court is not involved.

The composition with creditors procedure requires significant court involvement, including validation of the plan, appointment of one or more judicial commissioners and approval by the court after the creditors have voted.

In case of debt restructuring agreements, the court is responsible for the homologation of the agreement after the extrajudicial phase involving the negotiation of the agreements.

The recovery plan and related agreements are made fully out of court.

Clawback and antecedent transaction claims are governed by a specific set of rules for the recovery of assets unlawfully or unfairly removed from the debtor’s estate. These provisions aim to:

• protect the creditors’ interests; and
• uphold the principle of equal treatment. 

The clawback actions can be divided into transactions carried out in the ordinary course of business and transactions that are objectively prejudicial or abnormal.

The first category can include the payments of due and payable debts, the transfers of assets at market value and operations reflecting standard commercial behaviour.

These acts can be subject to clawback if they were performed within six months prior to the initiation of insolvency proceedings. In this case, it shall be proven that the counterparty was aware of the debtor’s state of insolvency (scientia decoctionis), with the consequence that the burden of proof lies with the insolvency practitioner or with the legal authority that has the right to file the clawback actions.

The second category can include gratuitous acts (as donations, free transfers, and so on) and payments made in an unusual manner or before the due date. Furthermore, the granting of security for pre-existing unsecured debts or transactions made under manifestly unequal conditions could be considered to be abnormal transactions.

These acts can be subject to clawback actions if they were performed within one year prior to the commencement of insolvency proceedings.

In these cases, the law often presumes the debtor’s intent to prejudice creditors (eventus damni) and the counterparty’s awareness of the debtor’s financial condition. Consequently, there is a lower burden of proof and the legal presumptions apply.

4.1 What is the applicable law that provides for clawback and/or antecedent transaction claims?

Clawback and antecedent transaction claims are governed by Italian insolvency law, more specifically by:

• Article 165 of the Italian Insolvency Code (ordinary clawback, according to Article 2901 of the Italian Civil Code); and
• Article 166 of the Italian Insolvency Code (clawback action in the insolvency proceedings).

The above applies to proceedings begun after the new Italian Insolvency Code.

For very old proceedings, Articles 66 and 67 of the Italian Bankruptcy Law (R.d. 16.3.1942, n. 267) would apply.

4.2 What are the relevant “look-back” periods for claims?

The ability to challenge transactions is limited by specific “look-back” periods, which vary depending on the type of transaction and the specific situation in which it was carried out.

As described above, these periods are one year prior to the declaration of insolvency for abnormal transactions, and six months prior to the declaration of insolvency for ordinary transactions.

For ordinary clawback actions the general rules of Italian civil law (Article 2901 of the Italian Civil Code) would apply.

4.3 Who can pursue the claims?

In a judicial liquidation process, the court-appointed receiver has the power to initiate clawback actions. In the case of composition with creditors, the judicial commissioner may also pursue such actions if authorised by the court.

4.4 What remedies are available and how do they operate in practice?

The primary remedy is the reconstitution of the debtor’s estate. If a transaction is successfully challenged, the asset or value transferred shall be returned to the insolvency estate. This remedy ensures that the proceeds are redistributed fairly among all creditors.

4.5 What defences are available?

The recipient of the challenged transaction may raise several defences, such as demonstrating good faith, showing that the transaction involved fair consideration, or that they were unaware of the debtor’s insolvency. In some cases, payments made to satisfy due debts may also be protected from clawback — for example, for strategic creditors (e.g. utilities).

4.6 Is there a general right of action in respect of transactions defrauding creditors or Actio Pauliana claims?

Beyond insolvency-specific remedies, Italian law allows creditors to bring general actions to challenge transactions intended to defraud creditors, such as the traditional Actio Pauliana (Article 2901 of the Italian Civil Code). These are available regardless of whether formal insolvency proceedings have been initiated.

4.7 Who can pursue the claims?

Actio Pauliana may be brought directly by creditors, even outside of insolvency proceedings, when they believe that a debtor has acted to frustrate their rights to recover debts by transferring or concealing assets.

4.8 What remedies are available and how do they operate in practice?

The remedy available under an Actio Pauliana is the declaration of ineffectiveness of the disputed transaction against the creditor who brings the action. This allows the creditor to enforce their claim against the asset, even though it has been transferred to a third party.

4.9 What defences are available?

The main defences in this context include the good faith of the third-party recipient, the absence of actual prejudice to creditors, and lack of awareness of the debtor’s intent to defraud. If these conditions are met, the challenged transaction may be upheld despite the creditor’s claim.

Italian insolvency law imposes specific and heightened duties on directors and managers when a company faces financial distress. They may incur personal liabilities both toward the company and directly toward creditors if they fail to comply with these obligations.

5.1 What are the duties of directors and managers?

Directors and managers must implement adequate organisational, administrative and accounting structures to detect financial distress in a timely manner (Article 2086 of the Italian Civil Code).
Once signs of crisis or insolvency appear, directors shall act primarily in the interest of creditors rather than shareholders and promptly adopt appropriate measures either to overcome the crisis or to initiate insolvency proceedings in order to avoid worsening the financial situation. Finally, they have the duty to preserve the company assets: continuing the business in a situation of clear insolvency may lead to personal liability if it causes greater harm to creditors.

5.2 What claims can be brought against directors and managers arising from breaches of those duties?

If directors or managers breach their duties, several types of claims may be brought against them:

• company actions for liability (typically initiated by new directors, liquidators or the court-appointed receiver);
• direct creditors’ actions, in case the company’s assets are insufficient to satisfy their claims; and
• special liability claims for having increased the company’s financial distress by persisting in mismanagement after the insolvency.

5.3 Who can pursue the claims?

The claims may be pursued by:

• the company itself;
• the court-appointed receiver (curatore) during judicial liquidation; and
• individual creditors, either independently or in a surrogate capacity, when the company and/or the court-appointed receiver fail to act.

5.4 Do directors have, at any time, a strict obligation to file for insolvency and, if so, when does that arise?

Directors are under a strict obligation to promptly initiate appropriate insolvency or restructuring proceedings when the company is insolvent. Failure to file in a timely manner may expose directors to personal liabilities for damages resulting from the delay, particularly if it leads to a worsening of the company’s financial position.

5.5 Can directors and managers be found liable for the increase in sums owed to creditors after a company becomes insolvent?

Directors and managers may be held personally liable for the increase in liabilities incurred after the company has become insolvent.

Continuing to trade or take on new obligations while insolvent, without a reasonable prospect of recovery, may result in direct claims for the additional losses suffered by the creditors.

5.6 In what other circumstances can directors and managers be found liable directly to creditors of the company?

Directors and managers may also be found liable directly to creditors if:

• they fail to adopt appropriate early-warning mechanisms and organisational measures;
• they engage in fraudulent or grossly negligent conduct; or
• they dissipate or conceal company assets, thereby prejudicing creditors’ rights.

The Italian Insolvency Code grants broad investigative powers to insolvency office holders (e.g. the court-appointed receiver, judicial commissioners, or appointed experts) to fully reconstruct the debtor’s financial, accounting and asset situation. These tools are essential for identifying hidden assets, evaluating antecedent transactions, and verifying possible managerial misconduct.

6.1 What information can be obtained by office holders in respect of a debtor’s property, information and affairs?

Insolvency practitioners are entitled to obtain a wide range of information regarding the debtor’s affairs, including:

• assets (real estate, registered movable assets, equity holdings);
• bank accounts and other financial relationships;
• accounting records and financial statements;
• ongoing contracts and liabilities;
• relevant pre-insolvency transactions; and
• potentially fraudulent or preferential acts.

They are also allowed to access tax records, judicial databases and company registries.

6.2 How is that information obtained in practice?

Information can be collected through:

• formal requests to the debtor, its directors, shareholders, auditors and third parties (e.g. banks and suppliers);
• access to public registries (e.g. Tax Agency, Land Registry, Companies Register, Motor Vehicles Database);
• online platforms and government databases (such as tax portals and commercial information systems); and
• appointment of technical experts or consultants to support investigations.

Debtors have a statutory duty to cooperate, including the obligation to deliver all relevant documentation and data.

6.3 Can the court assist in obtaining that information and how does that work in practice?

The court plays an active supporting role. It may:

• order individuals to produce documents or appear for questioning;
• authorise searches, document seizures or urgent investigative actions; and
• impose sanctions in case of refusal to cooperate.

In judicial liquidation proceedings, the court-appointed receiver may request the supervising judge to enforce cooperation or take coercive measures if necessary.

In cross-border insolvency matters, the assistance provided to foreign office holders in Italy depends on the location of the debtor’s COMI and whether the proceedings originate within the European Union (EU) or outside it.

7.1 Is the UNCITRAL Model Law on Cross-Border Insolvency adopted in the jurisdiction.

Italy has not adopted the UNCITRAL Model Law on Cross-Border Insolvency. However, cross-border cases are handled as follows:

• within the EU: Regulation (EU) 2015/848 applies directly and provides for the automatic recognition of insolvency proceedings commenced in the Member State where the debtor’s COMI is located; or
• outside of the EU: recognition shall be obtained through a judicial process before the competent courts.

The COMI is crucial in establishing the appropriate jurisdiction in which to initiate main proceedings and in determining whether Italy shall recognise those proceedings or may open secondary proceedings if there is a secondary establishment or significant assets located in Italy.

7.2 Is it possible to recognise office holders from other jurisdictions?

For EU proceedings, recognition is automatic based on the Regulation, upon presentation of the decision opening the proceedings and the appointment certificate of the foreign office holder.

For non-EU proceedings, recognition requires an application to the Italian court, which will review whether the foreign decision complies with Italian principles of jurisdiction, reciprocity and public policy.

7.3 What is the process and what are the conditions for recognition?

In the EU context, the process is informal and procedural cooperation is required under the Regulation. In non-EU cases, a formal request shall be submitted to the competent Italian court, accompanied by appropriate documentation (e.g. court decision and evidence of appointment). Recognition is granted if the foreign proceeding meets the conditions of proper jurisdiction, procedural fairness and compatibility with Italian public order.

7.4 What information can be obtained by office holders in respect of a debtor’s property, information and affairs?

Once recognised, a foreign office holder can access:

• the Italian Companies Register to verify corporate data;
• land registries for real estate assets; and
• banking and fiscal information, usually with judicial authorisation or through cooperation of judicially appointed professionals.

7.5 What steps can a foreign office holder take to recover assets belonging to the debtor?

A recognised foreign office holder may:

• initiate legal actions in Italy to recover assets;
• take enforcement measures, such as attachment or seizure of the debtor’s assets; and
• request the opening of secondary proceedings in Italy, if the debtor has an establishment or significant assets located there and the COMI is abroad.

7.6 Is a foreign office holder able to bring clawback claims or fraudulent transaction claims?

Once recognised, the foreign office holder may use general civil remedies, such as clawback actions.

The applicable law will depend on the context, it may be:

• Italian law if the assets or effects of the transaction are located in Italy; or
• the law of the COMI jurisdiction, under EU rules or principles of conflict of laws.

A foreign insolvency office holder from a non-EU jurisdiction (e.g. United States, UK post-Brexit) does not have automatic recognition. For the foreign insolvency office holder to be able to act in Italy, a recognition of the foreign judgment is required. Alternatively, the office holder could collaborate with a locally appointed Italian practitioner.

On the other hand, an insolvency office holder from an EU jurisdiction is recognised in Italy under EU insolvency law if the insolvency proceeding is opened in another EU Member State. The office holder can exercise powers in Italy, such as recovering assets, lodging claims and pursuing legal actions, without the need for a separate Italian procedure, as long as the main proceedings remain in the other Member State. They cannot, however, be appointed by an Italian court to manage a proceeding opened in Italy, unless they meet Italian eligibility requirements.

8.2 What are the conditions for becoming an office holder?

In Italy, insolvency office holders must meet specific professional requirements established by law. According to Italian Law, they must:

• be registered professionals, typically lawyers, accountants or business experts;
• possess at least five years’ professional experience in insolvency or business law;
• be listed in the official register of crisis and insolvency experts, managed by the Ministry of Justice (registro dei gestori della crisi); and
• meet standards of independence and impartiality, with no conflicts of interest with the debtor or creditors.

The court appoints the office holders based on these qualifications and may remove them for misconduct or in case of violation of their duties.

8.3 What are the main rules of professional conduct?

The main ethical rules are defined by:

• the code of conduct for insolvency practitioners, issued by professional bodies (e.g. the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) for accountants);
• general duties of impartiality, diligence, confidentiality and transparency;
• the obligation to act in the best interest of creditors; and
• the duty to accurately report to the court and comply with procedural deadlines.

Breaches of ethical or professional rules may lead to disciplinary sanctions, civil liability, or even criminal prosecution, depending on the severity of the misconduct.