The Insolvency Regime for Large Enterprises in Italy: An Economic and Legal Assessment

35 Pages Posted: 16 Oct 2018

See all articles by Nazim Belhocine

Nazim Belhocine

International Monetary Fund

Daniel Garcia-Macia

International Monetary Fund (IMF) - European Department

José Garrido

International Monetary Fund (IMF)

Date Written: September 2018

Abstract

The modernization of Italy's insolvency framework has been the subject of much interest in recent years, related not least to its role in potentially facilitating an efficient allocation of resources. A unique feature of Italy's insolvency framework is a special regime for large enterprises known as 'extraordinary administration'. This paper evaluates the merits of this special regime by assessing its efficacy and success in achieving its stated goals and comparing its features to international standards and best practices. It finds that the special regime tends to impose large costs on creditors and the state. The regime results, in most cases, in the sale of parts of the group, followed by a liquidation phase of the remaining assets which can take longer than the general regime, hindering legal certainty for creditors and more generally economic efficiency, investment and job creation. Based on international best practices and experience, consideration should be given to folding the special regime into the general insolvency regime, possibly with provisions to allow for state intervention in specific well-defined circumstances.

Keywords: Italy, Europe, special insolvency regime, extraordinary administration, bankruptcy of large enterprises, Corporation and Securities Law

JEL Classification: G33, K22

Suggested Citation

Belhocine, Nazim and Garcia-Macia, Daniel and Garrido, José, The Insolvency Regime for Large Enterprises in Italy: An Economic and Legal Assessment (September 2018). IMF Working Paper No. 18/218, Available at SSRN: https://ssrn.com/abstract=3267241

Nazim Belhocine (Contact Author)

International Monetary Fund ( email )

700 19th Street NW
Washington, DC 20431
United States

Daniel Garcia-Macia

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

José Garrido

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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