1. When can you be declared bankrupt in Italy?
In Italy, commercial entrepreneurs are subject to bankruptcy procedures, with the exception of state entities and small businesses.
Article. 2195 c.c. defines commercial entrepreneurs as those engaged in an industrial activity directed to the production of goods or services, an intermediary activity in the circulation of goods, a transport activity by land, water or air, a banking or insurance activity and other activities auxiliary to these.
Under Article 1 (bankruptcy law) entrepreneurs who demonstrate the joint possession of the following requirements are not subject to bankruptcy proceeding and to the pre-bankruptcy composition:
- having had, in the three years prior to the filing date of the bankruptcy application, a net equity with a total annual amount not exceeding 300,000 EUR;
- having realised, in each of the three years prior to the filing date of the bankruptcy application, gross revenues for a total amount not exceeding 200,000 EUR;
- having an amount of debts, even if not expired, of not more than 500,000 EUR.
The pre-requisite for a declaration of bankruptcy is the state of insolvency, as a pathological condition of the company for which the entrepreneur is no longer able to meet his obligations on a regular basis.
2. How long does it take to process a petition for bankruptcy in Italy?
After the bankruptcy petition is filed, a panel of three judges is appointed. This panel consists of a chairman, a rapporteur and a third judge. The judge, acting as a rapporteur having examined the petition, sets a hearing in order to listen to the applicant creditor and to the debtor, immediately assigning to the applicant a deadline for notifying the petition and the decree to the debtor.
Between the date of the notification of the convocation and that of the hearing, a period of not less than 15 days must elapse.
The court must set the hearing no later than 45 days from the filing of the appeal.
3. What can you do if you disagree with the bankruptcy order by the Italian court?
The bankrupt, or anyone who has an interest, with the exception of the applicant, are entitled to challenge the declaration of bankruptcy.
4. What happens if you are declared bankrupt in Italy?
The bankruptcy is declared by a court ruling that provides for the appointment of the judge delegated to the procedure and the appointment of the trustee.
The bankrupt is deprived, as a result of the declaration of bankruptcy, of the availability and administration of his assets and, more precisely, of those prior to bankruptcy and those that were received during the procedure.
5. What duties and powers does the trustee have in Italy?
The trustee is responsible for the administration of all the assets of the bankruptcy and has the task of carrying out all the operations of the procedure for which he is responsible. Supervisory power is vested in the delegated judge and the creditor committee.
The trustee prepares the liquidation program and proceeds to make an inventory of the assets of the bankrupt.
6. What kind of obligations do I have as a bankrupt in Italy?
The bankrupt has several statutory obligations, including a duty to provide information to the trustee.
If any information or clarifications are required for the management of the procedure, the bankrupt must be personally present in front of the delegated judge, the trustee or the creditors’ committee.
7. How can I monitor the progress of the bankruptcy in Italy?
Within 60 days from the declaration of bankruptcy, the trustee must present a detailed report on the causes and circumstances of the bankruptcy, on the diligence explained by the bankrupt in the management of the company, on the responsibility of the bankrupt or others and on what can be of interest in the preliminary investigations in criminal proceedings. Every six months after the presentation of the report, the editor shall also draw up a summary report of the activities carried out, indicating all the information gathered after the first report, accompanied by the account for its management.
A copy of the report is forwarded to the creditors’ committee, together with statements of postal or bank deposits relating to said period. The creditors’ committee or any member may make written observations. Another copy of the report is sent, together with any observation, electronically to the company registry office, within fifteen days following the expiry of the deadline for filing the observations in the court registry. Within the same period, another copy of the report, together with any comments, is sent by certified e-mail to creditors and to however holds any rights on the assets.
8. How long does a bankruptcy last in Italy?
Every bankruptcy is different – they can last from five to seven years.
9. Can I make arrangements with my creditors in Italy?
Both before and during the bankruptcy, the debtor can offer a composition with creditors whereby they are paid a percentage of their claims. Il concordato fallimentare (in-bankruptcy composition) is aimed at reducing the time needed in a regular bankruptcy proceeding.
10. How can an employee collect outstanding salary from their Italian bankrupt employer?
Only the last three paychecks are covered by the Istituto Nazionale della Previdenza Sociale (INPS) Guarantee Fund. The employee must make an application for admission to the liabilities of the bankruptcy and submit the application for payment to INPS. For all other salaries that have not been paid the employee is considered a preferred creditor.
11. Is there a special arrangement for the private person who is in danger of going bankrupt in Italy?
Law 3/2012 introduced for the consumer the possibility of presenting a plan for the repayment of their debts through a facilitated procedure. The procedure is aimed exclusively at natural persons who have contracted debts for purposes unrelated to entrepreneurial or professional activity.
The consumer must be in a state of over-indebtedness and must not be subject to bankruptcy proceedings and must not have requested the plan during the previous five years.