Patrizia Riva, Alessandro Danovi, Marina Azzola
INTERNATIONAL JOURNAL OF BUSINESS RESEARCH ISSN: 1555-1296
Publication of the International Academy of Business and Economics - 2016-06

Italian Insolvency Law has been widely reformed since 2005 in order to introduce new legal procedures
aimed at preserving troubled companies, discerning viable from irredeemable businesses, and increasing
productivity through a more efficient management of insolvency proceedings. The excessive duration of
bankruptcy cases was repeatedly brought to the attention of the European Court of Human Rights,
relating to the right to a fair trial in terms of reasonable duration. After the reform, the Preventive
Arrangement with Creditors (Concordato Preventivo) became Italy’s equivalent of US’s Chapter 11 and
can be considered the main instrument used by small and medium-sized companies (and sometimes
large ones) to manage insolvency by avoiding bankruptcy. This paper provides an empirical analysis on
filing of Preventive Arrangements with Creditors in the Court of Milan, one of the largest courts in Italy, in
the 2005-2014 period. Through the exam of 835 cases, 70% of the total number, the research shows the
different features of the procedure, analyzes the characteristics of companies that resort to it and its
diverse purposes of liquidation or restructuring. Due largely to the newness of the legislation, along with
the complexity of the Italian system, it is rather difficult to generalize conclusions. Nevertheless, the paper
shows how Preventive Arrangements with Creditors can be considered a more efficient instrument than
the alternative bankruptcy, both in terms of timeframe as well as with creditors‘ satisfaction. As part of the
overall European reform process of insolvency proceedings, following the 2014 Recommendation issued
by the European Commission, Italy seems to provide useful insights for other countries in Europe.