Securities are mainly divided in:

• securities over material assets (“garanzie reali”), such as real estate, equity shares, movable property, intangible property, intellectual property, accounts, etc, granted by the debtor or a third party (natural or legal person), acting as a guarantor; and
• personal guarantees (“garanzie personali”), where a third party (natural or legal person), different from the debtor, acting as guarantor, promises to pay back a debt or obligation if the main borrower defaults, being liable with all of his/her/its assets.

The most common types of securities in Italy are:

Mortgage: it is granted over an immovable property or a registered movable asset (such as ships, motor vehicles, etc), it is granted by the debtor or a third party in favour of the creditor, as a security for the fulfilment of an obligation.
Mortgage must be granted by public deed or private deed with notarised signatures (“atto pubblico” / “scrittura privata autenticata”) and its registration in a public real estate by a notary is required in order to produce any effect against third parties. The registration remains effective for twenty years and shall be renewed in order to maintain its effect.

Pledge (possessory): it is granted over an unregistered movable asset, to be physically delivered to the creditor (save for non-possessory pledge). Pledge does not usually require registration in a public registry office, but for some specific assets, such as quotas representing the corporate capital of limited liability companies (“società a responsabilità limitata”). The provisions ruling the pledge is contained in a proper agreement between the pledgor and the pledgee.

Pledge (non-possessory): Law Decree No 59/2016 of 3 May 2016, Decree No 114/2021 and, operatively, Revenue Agency resolution No 26/2023, introduced a new form of pledge, so-called “non-possessory pledge” (“pegno non possessorio”), in order to secure receivables in connection with the ordinary conduct of business. Although the registry specifically established by said law has been operational since June 2023, the number of users remains low, albeit with an overall guaranteed amount of considerable significance (approximately €6.84 billion during the first year), driven by a small number of high-value transactions. The “non-possessory pledge” has been predominantly employed by large corporations and in cross-border operations due to the high level of professional expertise required to resolve certain interpretive uncertainties.

Transfer of title: the above-mentioned laws also introduced a new form of corporate financing secured by the transfer to the lending party of a real estate asset and conditioned to the possible breach by the borrower of certain obligations under the relevant facility agreement.

Liens: differently from securities, liens (“privilegi”) are not contractually agreed between the parties but arise automatically by operation of law to guarantee certain categories of claims. Liens do not require any form of publicity, even when they apply to immovable property (“privilegio generale”).

In enforcing their security package, secured creditors may face some practical difficulties, depending on whether it happens out-of-court, judicially, or in an insolvency proceeding.

1. Out of court

• Debtor opposition: even though secured creditor holds a valid security interest, debtor or third parties may oppose enforcement, delaying it, or forcing the creditor to initiate judicial proceedings.
• Asset valuation: impartial appraisal of the secured asset is usually required to avoid any abuse by creditor who must always return the value exceeding the amount claimed. This step can be contested, particularly if creditor intends to take ownership of the asset or sell it out of court.
• Competing claims: if the secured asset is encumbered by multiple securities and/or liens, the creditor may have to compete with other concurrent creditors, reducing credit satisfaction by applying priority rules strictly stated by the Civil code.

2. Insolvency proceedings

Once an insolvency proceeding is opened, secured creditors are satisfied:

• according to the order laid down by specific rules provided by the law, regardless of any contractual intercreditor covenants;
• following specific rules; more precisely, in order to enforce their rights, every claim, even if secured, must be determined according to the strict provisions set forth by Legislative Decree No. 14 of 2019, the so-called Crisis and Insolvency Code (“Codice della Crisi d’Impresa e dell’Insolvenza” or “CIC”).

More specifically:

• stay of actions: once judicial liquidation (“liquidazione giudiziale”) is opened, individual enforcement actions are stayed. The secured creditor can no longer act independently but must file a claim in the insolvency proceeding.
• Delayed realization: the asset is sold by the insolvency practitioner according to procedural rules, which may require a long time.
• Distribution of proceeds: even if secured, creditor’s satisfaction may be reduced because proceeds might be partially or entirely absorbed by super-priority claims (e.g. costs of the insolvency proceedings).
• Challenges to the security interest: the existence, validity, or ranking of the security interest may be disputed, particularly if it was created within suspect periods (e.g., within six months before the opening of the bankruptcy proceedings).

Starting from 15 July 2022, the Bankruptcy Law dated 1942, after its 80 years of application, has been repealed by the new CIC which has been subject to multiple amendments since September 2024, when Legislative Decree n. 136 of 2024 was issued.

CIC regulates situations of “crisis” (i.e., the state of the debtor that makes insolvency probable, manifested by the inadequacy of the prospective cash flows to meet its obligations in the following 12 months) or “insolvency” (i.e., the state of the debtor manifested by defaults or other external facts showing that the debtor is no longer able to meet its obligations on a regular basis).

CIC applies to natural and legal persons, being consumers, professionals or entrepreneurs.

CIC provides for a thorough discipline regarding instruments for the regulation of crisis and insolvency (“strumenti di regolazione della crisi e dell’insolvenza”), that are the measures, agreements and procedures aimed at the rehabilitation of the debtor, judicial liquidation (“liquidazione giudiziale”) being the last resort.

Such legal instruments include:

1) certified recovery plan (“piano attestato di risanamento”);

2) debt restructuring agreement approved by the court (“accordo di ristrutturazione dei debiti omologato”);

3) restructuring plan subject to court approval (“piano di ristrutturazione soggetto ad omologazione”);

4) judicial composition with creditors, either with the aim of business continuity or for a liquidation purpose (“concordato preventivo in continuità / liquidatorio”); and

5) the over-indebtedness crisis resolution procedure (“procedura di composizione della crisi da sovraindebitamento”), applicable to consumers, professionals and minor entrepreneurs.

All these aforementioned instruments may be preceded by the negotiated settlement of business crisis (“composizione negoziata per la soluzione della crisi di impresa” or “CNC”), whose main purpose is to facilitate the early onset of the company’s financial difficulties and the activation of the remedies to maintain going concern and preserve employment.

Generally, when adopting these instruments, the debtor continues to manage the business. However, some restrictions may still apply, such as in the judicial composition with creditors whereby the debtor retains the management and the administration of his assets under the supervision of the appointed officer (“commissario giudiziale”) and shall be required to obtain court authorization for acts of extraordinary administration.

The relevant restructuring plan must be drawn up by the debtor, preferably with the support of independent professionals and must be reasonably capable of ensuring the satisfaction of creditors, either in whole or in part, and the business continuity.

Depending on the proceeding, creditor involvement may vary, ranging from voluntary negotiation to formal approval by creditor majorities.

In judicial proceedings, the competent court verifies the lawfulness, feasibility, and fairness of the plan before issuing its approval (“omologazione”), which is a condition for its enforceability towards creditors; the purpose is to promote timely resolution of the crisis, preserve going concern value when possible, and ensure fair treatment of creditors.

CIC contains specific provisions ruling new financings granted to debtor benefiting from special priority rights, provided that certain prerequisites are met.

Specifically, articles 99, 100 and 101 CIC provide that claims arising from financings granted:

• in connection with certified restructuring plans; or
• upon court authorization.

rank prior to unsecured and even secured creditors should a bankruptcy proceeding be commenced. The aim of the legislator is therefore to provide lenders with more comfort in evaluating the creditworthiness, especially when such financing is deemed essential to preserve the company’s going concern value.

Restructuring proceedings cannot generally release claims against non-debtor parties, unless in some specific circumstances.

For example, when a debt restructuring agreement is perfected among the parties (debtor-creditors) and is confirmed by the court, then:

• the debt write-off granted to debtor releases the guarantor from their obligation;
• the agreement with the debtor is also effective in favour of unlimited liability shareholders (please note that if they have provided guarantees, then they would continue to be liable, unless otherwise provided).

Moreover, judicial composition with creditors effects also apply to unlimited liability shareholders, as it terminates any judicial liquidation proceedings initiated against them.

If any liability arises against directors and/or auditors under an insolvency proceeding, these are settled with the competent statutory officers.

Regarding creditors’ organisation and representation, the CIC provides that, in judicial liquidation proceedings, the delegated judge may appoint the creditors’ committee, consisting of 3 (three) to 5 (five) members chosen among the creditors. The purpose is to represent in coordination the quantity and quality of the claims, with the aim of their equitable satisfaction.

The creditors’ committee supervises the actions of the official receiver/liquidator, authorises its acts and expresses opinions in the cases provided for by law, or at the request of the court or the delegated judge.

Any member of the creditors’ committee may also inspect the accounting records and documents of the proceedings and have the right to request information and clarifications from the official receiver/liquidator and the debtor; the same powers may be exercised by each creditor, subject to the authorisation of the delegated judge.

Advisory fees are usually covered by the debtor only in out of court procedures; in judicial proceedings, creditors bear their own advisory fees, but cost-sharing or reimbursement may be negotiated as part of the plan and is subject to judicial approval.

The CIC identifies early warning signals that, even before the onset of the crisis or insolvency, may predict the financial distress of a company. These include:

a) the existence of debts for wages that are at least 30 days past due and equal to more than half of the total monthly amount of wages;

b) the existence of debts to suppliers that are at least 90 days and exceeding the amount of debts not past due;

c) the existence of exposures to banks and other financial intermediaries that are past due for more than 60 days or that have exceeded the limit of credit facilities obtained in any form for at least 60 days, provided that they represent at least 5% of total exposures;

d) the existence of tax and social security debts over certain thresholds.

As for the CNC, it is noteworthy to mention Ministerial Decree of April 23, 2026, which, by repealing Ministerial Decree of March 21st, 2023,implemented the amendments to the CIC introduced by Legislative Decree n. 136 of 2024The Ministerial Decree gives even further centrality and value to the preliminary test (“test pratico”) which – even though it may not be considered as a crisis indicator – may help both the entrepreneur and the expert to assess whether and to what extent the recovery of the company is reasonably achievable; it represents a tool designed to support the enterprise in detecting financial distress and crisis signals.
The test is essentially based on the ratio between the debt to be repaid and the free cash flow, and gives the level complexity in the restructuring process; high level of debt-to-cash-flow ratios requires industrial and/or financial measures in a break to the past.

The CIC imposes proactive duties on directors, auditors and liquidators. Article 120-bis CIC imposes on directors and liquidators the duty to assess and determine whether to apply for any of the crisis or insolvency resolution legal instruments, through restructuring proposal to creditors whose terms and conditions must be described in a coherent business plan (either on a going concern or in a gone concern basis).

Failure to comply with these duties may result in liabilities for damages suffered by creditors as a result of delayed filings or mismanagement of the company. In cases of fraudulent or negligent bankruptcy (e.g., for concealment or dissipation of assets), directors can face criminal prosecution, be disqualified from holding office and held jointly liable for the company’s debts in aggravated cases.

Should the state of crisis or insolvency not be removed through one of the legal instruments described above (see § Local restructuring proceedings), debtor shall satisfy creditors by liquidating its assets.

The main proceedings governing the debtor’s assets’ liquidation are:

• the simplified judicial composition with creditors (“concordato semplificato”), but only in case of an unfavourable conclusion of the negotiations with creditors carried out by debtor in the CNC;
• the judicial composition with creditors with liquidation purposes;
• the judicial liquidation (“liquidazione giudiziale”) which applies to commercial entrepreneurs who are not a “minor enterprise”. During these proceedings, the debtor is subject, pursuant to Article 142 of CIC, to the so-called “divestment” (“spossessamento”), as is deprived of the management of the business.

For sake of completeness, the compulsory administrative liquidation proceeding (“liquidazione coatta amministrativa”), governed by a specific law different from the CIC that applies to specific companies and corporations identified based on the nature of the activity and the public interests associated with it.

Those court proceedings aim at satisfying the creditors according to statutory priorities through the sale of debtor’s assets, and ultimately dissolving the insolvent debtor as a legal entity.

In particular, judicial liquidation is declared by the competent court, upon request by debtor, creditors or the public prosecutor; the main bodies are the delegated judge, the receiver and the creditor’s committee.

Judicial liquidation proceedings may, in certain cases, take a considerable amount of time, even years; depending on the qualitative and quantitative composition of the assets to be liquidated, the number of creditors, etc.

Due to the circumstance that judicial liquidation opens creditors’ competition on debtor’s assets, from the date of the declaration of judicial liquidation commencement, no individual enforcement or precautionary action, even for claims accrued during the judicial liquidation, may be initiated or continued over the assets.

Any claim, even if it benefits from a pre-emption or prededuction right, as well as any property or personal right, over movable or immovable assets, must be previously verified by the court.

Claims secured by pledge or privileged pursuant to the relevant dispositions of the Civil Code may be realized outside the judicial liquidation even during the proceedings, provided that they have been admitted to bankruptcy with priority.

In order to be authorized to sell the secured assets, creditors must apply to the delegated judge, who, after hearing the official receiver and creditors’ committee, shall issue a decree setting the time of the sale and determining the process to be followed; the delegated judge may also decide to assign the assets to the creditor who made the application for them.

Foreign creditors are not dealt with in a different way in proceedings in the Italian jurisdiction. However, extraterritorial effects depend on the applicable legal framework governing cross-border insolvency. According to Regulation 2015/848, the opening of main insolvency proceedings in one Member State is automatically recognized in other Member States; on the other hand, outside the European Union, the extraterritorial effects are not automatic and depend on whether the foreign jurisdiction recognizes the insolvency proceeding.

During an insolvency procedure and in particular under a judicial liquidation, creditors are not entitled to enforce their claims directly against the debtor’s assets, but must instead participate in a collective process, governed by the principle of par condicio creditorum. The procedure starts from the filing of a proof of claim to be verified in a specific procedure carried out under the supervision of the delegated judge. Once included in the statement of liabilities (“stato passivo”), creditors are satisfied based on distribution plans (“piani di riparto”) in accordance with the statutory ranking of claims, without prejudice to any pre-emptive rights (“cause di prelazione”) held by secured creditors.

Creditors’ committee, if any, may represent the creditors’ interests during the procedure (see above).

As to the reorganisation plans, they are more proper to the restructuring procedures, rather than to the insolvency ones aimed at liquidating the debtor’s assets.

CIC (Article 56) provides for specific requirements and forms that need to be described in any reorganisation plan.

In particular, the restructuring plan must be dated and must contain:

a) the name of the debtor and any related parties, its assets and liabilities at the time of submission of the plan and a description of the economic and financial situation of the company and the position of the workers;

b) a description of the causes and extent of the crisis or insolvency situation;

c) the intervention strategies;

d) a list of creditors and the amount of the claims for which renegotiation is proposed and the status of any negotiations, as well as a list of non-participating creditors, indicating the resources allocated to the full satisfaction of their claims;

e) any new financing contributions envisaged and the reasons why it is necessary for the implementation of the plan;

f) the timing of the actions to be taken, which allow for verification of their implementation, as well as the initiatives to be taken in the event of a deviation from the planned objectives;

g) the business plan and an indication of its effects on the financial plan, as well as the time needed to ensure the rebalancing of the economic and financial situation;

g-bis) a detailed indication of the expected costs and revenues, the financial requirements and the related methods of coverage, also taking into account the costs necessary to ensure compliance with regulations on occupational safety and environmental protection.

Under an insolvency proceeding, creditors are satisfied in accordance with a statutory order of priority; the Italian system of privileges is one of the most complex in the European Union and should have been subject to a thorough reform, which has not yet been implemented.

1) In principle, secured creditors (“creditori privilegiati”), (whose claims are backed by a specific asset or a collateral of the debtor) are paid first.

2) Thereafter, come unsecured creditors (“creditori chirografari”), as they do not benefit from any specific security over the debtor’s assets.

3) Finally, there are subordinated creditors (“creditori postergati”), whose claims are satisfied only after the secured creditors and unsecured creditors.

CIC has introduced some significant changes in this regard.

Under a restructuring plan subject to court approval, the entrepreneur may provide for the satisfaction of creditors, after dividing them into classes according to their legal position and homogeneous economic interests, distributing the value generated by the plan even in derogation of Articles 2740 (ruling that debtor is liable with all of his/her/its present and future assets) and 2741 (ruling the competition among creditors based of relevant priority rights) of the Civil Code and the provisions governing the ranking of legitimate causes of priority; the requirement is that the proposal is approved by the unanimous vote of the classes.

Moreover, under the judicial composition with creditors aimed at business continuity, the liquidation value is distributed among creditors in accordance with the ranking of legitimate causes of priority, meanwhile for the value exceeding the liquidation value, it is sufficient that the claims included in a class receive overall treatment at least equal to that of the classes of the same grade and more favourable than that of the classes of lower grades.

External financial resources (e.g. granted by shareholders and/or investors) may be distributed in total derogation from the above provisions.

The opening of judicial liquidation does not only “crystallize” the debtor’s assets, but also allows to revert to the previous state, by neutralizing the disposals carried out by the debtor prior to the opening of the proceedings.
More specifically, the debtor’s pre-insolvency transactions can be challenged with the “claw-back actions” (“azioni revocatorie”). Indeed, pursuant to Articles 165 and 166 of CIC the official receiver is entitled to seek for the ineffectiveness of the acts performed by the debtor during certain suspect periods preceding the opening of the judicial liquidation.

The insolvency claw-back action does not render the act void but only relatively ineffective to creditors, with the following effects:

• the asset is recovered into the assets of the insolvency procedure; an
• the party who has to return the asset is admitted to the liabilities of the judicial liquidation.

Please note that payments made and guarantees granted in execution of one of the instruments for the regulation of crisis and insolvency are exempted form claw-back actions; such exemption does not apply in cases of wilful misconduct or gross negligence on the part of the professional certifying the plan or wilful misconduct or gross negligence on the part of the debtor, when the creditor was aware of this at the time of the performance of the act, payment or provision of the guarantee.

Under the CNC, the application of protective measures (Article 18, paragraph 5 of CIC) prevents the termination of pending contracts solely due to the submission of the application to access CNC, or even due to the existence of defaults by the debtor.

Under the judicial composition with creditors (on a going concern basis), pending contracts (still ongoing but not yet performed or fully performed at the time of the application) continue to produce their effects. The debtor may request the court’s authorization to suspend and/or terminate such contracts only if they are incompatible with the proposed Plan (Articles 94-bis, 95, and 97 of the Italian Business Crisis and Insolvency Code).

As to restructuring plans subject to court’s confirmation (Article 64-bis of CIC), rules applicable to existing contracts mirror those set for the judicial composition with creditors, in accordance with the general rule of the continuation of existing contracts, their suspension or termination being the exception.

Finally, in judicial liquidation proceedings, the general rule is the suspension of existing contracts upon the commencement of liquidation. The receiver may choose either to terminate or continue the contracts (Article 172 of CIC). Contractual clauses that provide for termination due to the commencement of judicial liquidation are deemed ineffective.

However, if the creditor initiated an action for termination prior to the commencement of liquidation, the proceedings may continue, and the resulting judgment will produce the effects of any termination. The general rule of contract suspension may be reversed if the receiver is authorized to continue the business operations during liquidation, in which case the default rule becomes contract continuation.

In order to facilitate the transfer of businesses or business units, an exception is made to the joint liability rule set forth in Article 2560, paragraph 2 of the Italian Civil Code, which – under ordinary (solvent) circumstances – establishes the buyer’s joint liability with the seller for the pre-existing business debts resulting from the accounting books.

Specifically, subject to compliance with publicity requirements and court authorization, the transfer of a business or part of, it may be authorized by the court – even prior to the approval – neutralizing the effects of Article 2560, paragraph 2 of the Civil Code; Article 2112 of the Civil Code (Maintenance of workers’ rights in the event of a transfer of business) remains applicable, the buyer remaining jointly liable with the seller for debts towards workers.

This exception applies in the following contexts:

• in the CNC, pursuant to Article 22, paragraph 1, letter d) of CIC;
• in restructuring agreements subject to court’s confirmation, pursuant to Article 64-bis, paragraph 9-bis, of the CIC;
• in the judicial composition with creditors, pursuant to Article 118, paragraph 8, of CIC;
• in judicial liquidation, pursuant to Article 214, paragraph 3, of CIC.

As a result, the purchaser generally acquires the business “free and clear” of pre-existing debts; this is to ease the merger and acquisition transaction regarding distressed companies with the aim to maintain business continuity and preserve jobs.

More generally, the transfer of assets in a restructuring or insolvency situation must comply with the principle of competitiveness, ensuring that the maximum value obtained from the market is made available to creditors.

Stricter procedures apply in cases such as judicial liquidation, whereas more flexible requirements are observed in instruments like the negotiated settlement for enterprise crisis solution.

On April 1st, 2026, Directive 799/2026 has been published on the Official Journal of the European Union to promote the harmonization of European Insolvency law, in line with Directive 2019/2023; Member States shall implement the Directive by January 22nd, 2029.

The most significant innovation is represented by so called “pre-pack” proceedings; Member States are required to introduce a procedure composed of both preparatory and executory phases, with the purpose to transfer the business or assets thereof to the best bidder maintaining the going concern value of the company.

The debate has already begun as to whether the pre-pack will be perceived into the Italian legal system as a brand new crisis resolution tool or by amending an existing one; in the latter case, it is likely that the CNC would be amended to incorporate the new features of the pre-pack.

CIC promotes the early detection of corporate distress and, to this end, imposes upon the entrepreneur the duty to adopt an appropriate organizational, administrative, and accounting measures, as well as the obligation to promptly undertake the necessary initiatives to address the state of crisis.

The law also imposes duties on other entities – such as auditors, public creditors, banks and financial intermediaries – to promptly notify the entrepreneur of the occurrence of conditions of financial or economic imbalance that make a crisis or insolvency likely, including delays in payment of tax or social security debts.

The above duties are aimed at imposing the entrepreneur to promptly react.

Failure to comply with these duties may expose directors to civil and criminal liability, potentially even resulting in the removal of the director with cause.

Directors & Officers (D&O) insurance provides for protection against potential claims for damages arising from civil, criminal, or administrative liability incurred in the performance of their duties, except in cases involving fraudulent conduct or violations of the law.

Neither restructuring nor insolvency proceedings may have the effect of releasing directors (and other stakeholders) from liability for previous actions and decisions.

Generally speaking, duties of directors are laid down by the Italian Civil Code; they shall perform the duties imposed on them by law and by the articles of association with the diligence required by the nature of their office and their specific powers.

Directors of a joint stock company are liable for:

• the damages arising from failure to perform their duties;
• any failure to comply with their obligations to preserve the integrity of the company’s assets, especially if, having been aware of harmful facts, they failed to do everything in their power to prevent them from occurring or to eliminate or mitigate their harmful consequences;
• any damage suffered as a direct result of intentional or negligent acts committed by the directors;

Directors owe their responsibility not only to the relevant shareholders and stakeholders in general, but, incrementally in distressed situations, to all creditors, when the debtor’s estate does not prove to be sufficient to satisfy everyone’s claims.

For instance, directors and apical officers, such as general managers and directors, may be held criminally liable in the event of abusive use of credit (“ricorso abusivo al credito”) i.e. when they resort or continue to have recourse to credit by concealing their state of insolvency, as well for other crimes such as fraudulent bankruptcy (“bancarotta fraudolenta”), namely when they misappropriate, conceal, or dissipate corporate assets to the detriment of creditors.

To determine whether the foreign restructuring or insolvency proceedings and the related decisions issued by a foreign court can produce legal effects in Italy, over a local debtor, it is essential to check whether there is a specific convention or treaty in place between Italy and the foreign State, or for EU Member State, whether the relevant European Union legislation (in particular European Regulation 2015/848) applies.

As a principle, an insolvency proceeding commenced in one EU Member State is automatically recognized in all other Member States.

Italian courts generally have jurisdiction when the debtor has its COMI (“Centre of Main Interest”) in Italy. This applies even if the company transferred its COMI abroad within the year preceding the filing of the application before the foreign court, since the earlier COMI remains relevant for determining jurisdiction and avoiding abusive forum-shopping.

Italian courts may issue a ruling concerning the restructuring or insolvency of a debtor company whose COMI is located abroad but maintains an establishment in Italy. In such cases, jurisdiction is limited to assets located within Italian territory, as permitted by the rules on secondary (territorial) proceedings under EU Regulation.

A decision on restructuring or insolvency rendered by a court of a non-EU country, or of a country with which Italy has no applicable convention, may only be recognized in Italy through an exequatur procedure. In this situation, the Italian court must verify, among other things, compliance with the adversarial principle, that the foreign judgment is final and binding, and that it does not conflict with any Italian judgment or pending proceedings, as required under Law No. 218/1995 on private international law. The Court also assesses potential conflicts within Italian public policy.

Italy, like most EU countries, has never transposed the UNCITRAL legislation on Model Law I (neither on Cross-Border Insolvency, nor on Recognition and Enforcement of Insolvency-Related Judgments), even though, outside the scope of the relevant EU Regulation, it has clearly inadequate legislation consisting of a few provisions of CIC and the old private international law act of 1995, supplemented by a few international conventions.

Difficulty remains for lawyers in European Union countries, who are used to a different system with many more exceptions, to accept a system that makes lex concursus the universal cornerstone of all relevant legislation, in the clear belief that the venues for opening cross-border proceedings are few, well defined, and based on common and shared principles.

Even though no cases are known of challenges to the recognition of English proceedings in Italian jurisdiction following the Brexit, it is likely that also Italian judges will take into consideration the fact that, after Brexit, European insolvency procedures no longer benefit from automatic recognition in the United Kingdom. The UK legislator did not retain the principle set out in Article 19(1) of the Regulation (EU) 2015/848. As a result, the recognition of any European insolvency procedure in the UK now follows the mechanisms provided under the Cross Border Insolvency Regulations 2006, which implement the UNCITRAL Model Law in the United Kingdom.

Since European insolvency proceedings are now considered as foreign insolvency proceedings under English law, the opening of an EU insolvency procedure has become a “neutral” event for the English legal system unless it meets the criteria for recognition under the Model Law. It is therefore likely that the opposite will occur with English procedures in Italy: as UK is now a non-EU country, English proceedings no longer enjoy automatic recognition under the EU Insolvency Regulation and must instead be recognized through the Italian exequatur process provided by Law No. 218/1995.

This change may give rise to future challenges in practice.

CIC contains specific provisions governing Italian jurisdiction:

• Article 11 states that, without prejudice to international conventions and European Union legislation, Italian jurisdiction over applications for access to crisis management and insolvency instruments or insolvency proceedings governed by this law, shall exist when the debtor has its COMI or an establishment (“dipendenza”) in Italy; and
• Article 26 further provides that entrepreneurs whose COMI are located abroad can also be admitted to an Italian crisis and insolvency regulation instrument or be subject to insolvency proceedings in Italy, even if similar proceedings have been initiated abroad, when they have an establishment in Italy.

To such extent, Italian courts will likely act in accordance to judgment of September 19, 2024 (Case C-501/23), of the Eighth Chamber of the Court of Justice, which confirmed that, pursuant to Article 3(2) of the Regulation (EU) 2015/848 of the European Parliament and of the Council of May 20, 2015, on insolvency proceedings, if the COMI is located in the territory of a Member State, the courts of another Member State have jurisdiction to open insolvency proceedings against that debtor only if the debtor has an establishment in the territory of that other Member State.

The Court of Justice also clarified that that the concept of COMI under Article 3(1)(3) of Regulation, must be interpreted as meaning that the concept of “COMI” does not correspond to the concept of “establishment” defined in Article 2(10).
In particular, the assumption that in the case of a natural person who carries out a business or professional activity, it is presumed, unless proven otherwise, that he/she habitually manages interests at the place where the main place of business is located, since there is a strong likelihood that this place corresponds to the COMI, can be overcome following an assessment that takes into account a set of objective and third-party verifiable elements relating to the debtor’s economic situation (such as, in particular, those that make it possible to identify the place where that person manages their economic interests and where most of their income is received and spent).

There are no known analyses that allow us to state which country has in the Italian jurisdiction the most cross-border problems with (see § 18 as to Brexit impacts).

The Italian legal system has ultimately introduced a specific regulatory framework for groups of companies in restructuring and insolvency proceedings, specifically under Title VI of CIC.

Nevertheless, the national regulatory framework on group insolvency has not fully addressed the demands raised at the European level under Directive (EU) 2019/1023, particularly with respect to the costs arising from the lack of harmonization among the insolvency laws of the various Member States.I

As already mentioned in §17, Italy – like most EU countries – has never transposed the UNCITRAL legislation on Model Law (nor on Enterprise Group Insolvency), as it mostly relies on European Union Regulations and its national Code.

CIC has been amended several times after its entrance into force in July 2022; the most recent reform has been introduced by Legislative Decree No. 136/2024, whose purpose was to enhance the effectiveness, efficiency and predictability of the proceedings established under CIC.

On March 28, 2025 the Council of Ministers approved the draft law on the reform of extraordinary administrations and cooperative and mutual entities, with the objective of (i) simplifying the rules governing extraordinary administration and make its management more efficient and (ii) updating the legislative framework for cooperative and mutual entities, adapting it to the new dynamics of the current economic and social context. Moreover, specific measures are envisaged in the context of CNC, including enhanced reporting obligations by the expert to the Ministry of Enterprise and Made in Italy on the progress of negotiations.

The Directive 799/2026 of the European Parliament and of the Council COM/2022/702, also known as “Insolvency Directive II”, represents the latest most important innovation. Its target is to harmonize certain aspects of insolvency law in order to (i) reduce existing differences between national systems that are perceived as a significant obstacle to the further development of the market, including the free movement of capital, and (ii) encourage cross-border investment, given that lengthy insolvency proceedings, low recovery rates and high procedural costs influence creditors’ and investors’ risk assessments and ultimately increase the required risk premium. Three aspects of particular interest stand out in the proposal: (i) the timing and methods of recovery of assets; (ii) the efficiency of procedures, especially through the introduction of pre-pack proceedings, discussed in § 14; and (iii) the distribution of proceeds.

During the most recent years, based on common law experience, Italy has undergone a cultural shift in the bankruptcy law.

Initially, the Italian legal system was creditor friendly, mainly oriented toward punishing and expelling from the market the insolvent debtor and repaying the creditors by forced sale of its assets. For almost 80 years, bankrupt proceeding (“fallimento”) was the pin of the insolvency legal system. Moreover, all bankruptcy proceedings involved public intervention and out of court proceedings were not provided.

Only in recent times, a significant change has occurred. By implementing European Directive 2019/1023, legal instruments more favourable to the business continuity (rather than to the debtor) were introduced, following the common law practice whereby restructuring proceedings aimed at giving the debtor a £second chance”, such as “Chapter 11”, already existed.

Through the CIC a number of proceedings, such as CNC, were introduced, which became very popular; companies and business continuity are now at the centre of the proceedings, opening up possibilities for second chances and fresh starts, favouring private settlement and limiting the courts’ involvement solely to specific situations, such as to confirm/grant protective measures and precautionary measures, authorize loans and financings and transfers of the business or asset thereof.

The purpose of this approach is to limit the application of specific civil law rules in order to erect an effective ring fence around the debtor who is preparing a recovery plan (think of the derogations from key principles of private law, such as Articles 1372 and 1411 of the Civil Code in cases of “special” or “extended effectiveness” AdRs, and commercial law, such as Articles 2446, 2447, 2482-bis/ter of the Civil Code, in derogation from the “recapitalize or liquidate” obligation).

Sociopolitical factors can significantly influence restructuring and insolvency proceedings in Italy, often amplifying the influence of certain stakeholders. In particular, the protection of employees frequently attracts institutional and media attention, especially in cases where large enterprises or companies with a strategic presence in specific regions are involved.

In such scenarios, trade unions and local political actors may exert substantial pressure to safeguard employment, thereby influencing both negotiations and, to some extent, judicial proceedings.

Starting from the CNC one of the aim of negotiations between the entrepreneur, creditors, and any other interested parties, it to identify a solution to overcome crisis situation, including through the transfer of the company or parts thereof and preserving, as far as possible, jobs.

The State plays an active role in cases of corporate distress, especially when they involve enterprises of national relevance or strategic sectors. Legislative Decree No. 270 of 8 July 1999 introduced specific measures for managing the insolvency of companies with a large number of employees or a significant impact on the national economy (“Amministrazione Straordinaria delle grandi imprese in stato di insolvenza”), allowing the State to intervene with exceptional powers aimed at preserving corporate assets, protecting employment, and ensuring the continuity of business operations. The Ministry of Enterprises and Made in Italy plays an important role, as it authorizes and supervises the special commissioners responsible for the management and restructuring of the business.

It should also be mentioned that, in response to the health emergency caused by the spread of Covid-19, at a first stage, and to enable Member States to support the economy in the context of Russia’s invasion of Ukraine, at a later stage, the European Commission issued a “Temporary Framework for State Aid Measures to Support the Economy,” the duration of which has been extended several times.

The Italian legislator has therefore implemented various measures to support businesses, including, inter alia, certain public guarantees on loans granted mainly through:

• The “Fondo di Garanzia” for micro, small, and medium-sized enterprises managed by Mediocredito Centrale – Banca del Mezzogiorno S.p.A. (“MCC”), meant as a public finance instrument aimed at facilitating access to bank credit for SMEs through the granting of a public guarantee to partially cover the financing granted by credit institutions, leasing companies, and other financial intermediaries;
• The “Istituto per i Servizi Assicurativi del Commercio Estero” (“SACE”), authorizing it to issue guarantees and insure the political, catastrophic, economic, commercial, and exchange risks to which national operators are directly or indirectly exposed.

It is worth to mention that scholars and case law have debated the nature of the credit arising from the provision of the above said guarantees and the possible scenarios for satisfying the claims of SACE and MCC in the context of restructuring projects and insolvency proceedings; in the end, the Italian Supreme Court has ruled that such claims benefit of a super priority right which prevails over any other pre-emption right, regardless of the cause, except for the privilege for legal expenses and those provided for in Article 2751-bis of the Italian Civil Code (workers), without prejudice to any prior pre-emption rights belonging to third parties.

The presence of these “state” guarantees is having a significant impact on debt restructuring operations as it risks making the secured creditor (typically a bank or financial intermediary) indifferent to the negotiation and outcome of the transaction.

Nonetheless, it is highly advisable that decisions be made by secured creditors in a careful manner, adequately justified and justifiable ex post in the management of secured loans, also to protect the position of the guarantor; in this regard, it is always recommended that secured creditors carefully evaluate proposal from the debtor, in order to take well ground decisions. An uncooperative attitude that relies exclusively on the prospects of recovery guaranteed by the solidity of the public guarantor could in fact lead to disputes regarding the validity and effectiveness of the State guarantees.

The already mentioned “cultural shift” that Italy has undergone with the new legal framework requires a corresponding profound change in the mindset of debtors (especially when entrepreneurs), creditors (in particular, banks) and stakeholders in general.

CIC seeks to guide this uneasy mental change by imposing specific behavioural obligations on the parties to be observed during negotiations in restructuring proceedings and insolvency procedures, as well.

CIC expressly states that in CNC, during negotiations and proceedings for access to crisis and insolvency resolution tools, debtor, creditors, and any other interested parties must act in good faith and fairness.

Specifically, debtor has the duty to:

a) explain the situation in a complete, truthful, and transparent manner, providing all information necessary and appropriate to the negotiations initiated, and to the crisis and insolvency resolution instrument chosen;

b) promptly take appropriate steps to identify solutions to overcome pre-crisis, crisis or insolvency, also in order to not prejudice the rights of creditors;

c) manage the assets or the business during the proceedings in the priority interest of creditors.

On the other hand, creditors and all parties involved in the settlement of the crisis and insolvency have a duty to cooperate loyally with the debtor, with the expert in CNC and with the bodies appointed by the judicial and administrative authorities, and to respect the obligation of confidentiality regarding the debtor’s situation, the initiatives taken by the debtor and the information acquired during negotiations.