Collecting in Italy

• ThepaymentbehaviorofdomesticcompaniesispoorandtheaverageDSOisexcessive,eventhoughtheregulationsonlatepaymentsaremoreconstrainingthantheapplicableEUrules.

• Proceduraldelaysandcostsarehighwhileenforcingcourtdecisionsmayprovetobearealchallenge.Thus,commencinglegalactionwithoutfirstestablishingapre-legalcollectionstrategyisunreasonable.

• Whenthedebtorisinsolvent,debtrenegotiationmechanismshavebeenputintoplacebuttheyremainmostlyunusedinpractice.Liquidation(bankruptcy)thereforeremainsthedefaultroute,butleaveslimitedopportunitiesforunsecuredcreditorstorecovertheirdebt.

Collection complexity

Complexity relating to

Notable High Very High Severe

Payments

Court proceedings

Insolvency proceedings

Notable Severe

Euler Hermes

CollectionProfileItaly

ContentsGeneral Information........................................................................................................................................3

Availabilityoffinancialinformation................................................................................................................3Maincorporatestructures...............................................................................................................................3Regulatoryenvironment..................................................................................................................................3

Getting Paid........................................................................................................................................................4

DaysSalesOutstanding(DSO).......................................................................................................................4Latepaymentinterest.......................................................................................................................................4Debtcollectioncosts.........................................................................................................................................4Ownershipprotection......................................................................................................................................4Payments............................................................................................................................................................. 5

Collecting Overdues........................................................................................................................................6

Amicableaction.................................................................................................................................................6Legalaction.........................................................................................................................................................6Alternativestolegalaction..............................................................................................................................8

Handling Insolvent Debtors..........................................................................................................................9

Insolvencyproceedings...................................................................................................................................9

Days Sales Outstanding (DSO): DSO is85daysonaveragein2016(comparedto88daysin2015).

General information

Availability of financial informationItmaybedifficulttoobtainreliablefinancialinformationonItaliancompaniessincethelegalframeworkdoesnotprovidebusinessesanyincentivetodoso.Relyingonitsstrongterritorialorganizationbasedondelegations,andaconnectedinternaldatabase,EulerHermesallocateseachcompanyagradereflectingitsfinancialhealthandhowitconductsbusiness.Thegradesrepresentacoreofourknowledgeandanalyses,andhelpclientsidentifyandavoidrisk.Dataiscontinuouslymonitoredtoofferthemostup-to-dateinformationtosupportmanagementdecisions.

Main corporate structuresLiabilityforbusinessdebtsisdeterminedbylegalstructures,whichmaybedescribedasfollows:• SoleProprietorshipisavailableforsmallbusinessesmanagedby

anindividualandforwhichnocommercialstructureisnecessary.Inthiscase,theownerisheldliableforallbusinessdebts.TwoormoreindividualsmayalsodecidetoshareownershipandresponsibilitiesthroughPartnerships(societàinnomecollettivo,s.n.c.),inwhichcasethepartnersmaybejointlyandindividuallyliablefortheactionsoftheotherpartners.LimitedLiabilityPartnerships(societàinaccomanditasemplice,s.a.s)alternativelyofferlimitedliabilitytothepartners.

• Incorporatedentities(SocietàdiCapitali)arealsoavailable.LimitedLiabilityCompanies(societàaresponsabilitàlimitata,Srl)areinpracticethemostfavoredlegalentitiesbecausetheyrequireareasonableminimumcapitalamount(EUR10,000)whilethepartners’liabilityislimitedtotheircontribution.Joint-StockCorporations(societàperazioni,SpA)areusedforlargerstructuresandrequireaminimumcapitalamountofEUR120,000whichmustbedividedintotradableshares.Intheseentities,theshareholders’liabilityislimitedtothevalueoftheirshares.

• ForeignbusinessesmaysettleinItalythroughBranchOffices(sedesecondaria),buttheseentitiesarenotseparatefromtheparentcompany’slegalstructureandthusoffernoliabilitylimitations.Forthisreason,subsidiariestendtobesetupthroughSrlbusinessstructures.JointVenturesmayalsobeestablishedbycontractorthroughpartnerships.

Regulatory environmentItalyhasaCivilLawsysteminwhichtherulesarecodifiedandbindthecourts.Bycontrastwithcommonlawcountries,thecaselawthereforeonlyhasalimitedimpactonthecourts.BusinessrelationsareregulatedundertheCivilCode(CodiceCivile),whilelitigationproceedingsaregovernedbytheCodeofCivilProcedure(CodicediproceduraCivile).Allbusinessclaimsfallunderthejurisdictionofordinarycourts(Tribunale)sometimesorganizedinspecializeddivisionsdependingontheirsize.AppealcourtsaswellasaSupremeCourtofCassationalsoexist.

3

Getting Paid

Days Sales Outstanding (DSO)CollectionoflatepaymentsinItalycontinuestobedifficultdespiteagradualimprovementinpaymentbehavior,withDSOunder90daysin2016(85dayscomparedto88daysinthepreviousyear)intheprivatesectorandsixmonthstoayearwhendealingwithapublicpartner.Thismaybeconsideredanissueinsofarasthelawstipulatesthatpaymentoughttooccurwithin30days,butthismayalsobeexplainedbythefactthat,asaresultoftheeconomiccrisis,businessestendtousedelaysasacreditmanagementsubstitute.Moreover,therecentreformof theinsolvencylawaimedatlimitingthedamagecausedbythelackofsupportfromthebankingindustryhasalloweddebtorstoobtainmoretimetopaytogetherwithmorefavorableconditions.Additionally,debtorstendtobecomeincreasinglyuntraceable.

Late payment interestLatepaymentinterestmaybechargedtothedebtorinItaly.TheRecastDirective2011/7/EUwhichstipulatesthatpaymentsintheEUmustbemadewithin60dayswastransposedintodomesticlaw(DecretoLegislativo9novembre2012,n.192)buttherulesinItalyarestricterthantheEUrequirements:asageneralrule,business-to-

Late payment interest: Asageneralrule,business-to-businesstransactionsmustbepaidwithin30calendardaysfollowingthedateofreceiptoftheinvoicebythedebtor.

businesstransactionsmustbepaidwithin30calendardaysfollowingthedateofreceiptoftheinvoicebythedebtor.Beyondthispoint,creditorsareentitledtoclaiminterestwithouthavingadunningletter,atarateprovidedinthecontractualagreement.Intheabsenceofsuchanagreement,thereferencerateoftheEuropeanCentralBank(reviewedeachJanuaryandJuly),increasedbyatleast8%points,maybeapplied.Althoughauthorizedbylaw,theseagreementsoftenconstitutesignificantnegotiationtoolsbuttheyshouldbesignedbybothparties,otherwisetheycouldbeconsidered“unfairterms.”

Debt collection costsInaddition,thedirectiveentitlescreditorstoreceive(withoutrequestingit)aflatEUR40sumtocompensatetheirrecoverycostspluscompensationforanyrecoverycostsexceedingthatsum.Inpractice,Italiandebtorsrarelyagreetopaylatepaymentinterest,whichisthenessentiallyusedasanegotiationtool.Again,havingbothpartiessignanydocumentisimportant.

Ownership protection:RetentionofTitle(RoT)agreementsaimingatpreservingownershipovergoodsuntiltherelatedinvoiceispaidinfullisadmittedunderItalianlaw,butremainsuncommonforseveralreasons.Firstly,RoTprovisionswouldonlybeenforceableprovidedthattheyhavebeenregisteredbeforeanotaryataverifiabledate(‘datacerta’asprovided

4

underArticle1524oftheCivilCode,andunderArticle11(3)ofLegislativeDecree231/2002implementingDirective2000/35/EConcombatinglatepaymentincommercialtransactions).Havingsaidthis,thepublicityrequirementmaybeexplainedbythefactthatRoTinItalywasoriginallyrelatedtoinsolvencyproceedingsandaimedatpreventingcollusionbetweenadefaultingdebtorandacreditortothedetrimentofothercreditors.Secondly,itisuncertainwhetherextendedRoTaimingatpreservingownershipovergoodsdespitetransformationbythebuyerwouldbeadmittedbyItaliancourts.EnforcingRoTprovisionsisdifficultinpracticebecausetheprocedureiscostlyandremainsirregularduetoalackofrecentrelevantcaselaw.

Payments• Themostcommonpaymentmethodsareasfollows:

Sepabanktransfersareamongthemostpopularpaymentmeansastheyarefast,secured,andsupportedbyanincreasinglydevelopedbankingnetworkinternationallyanddomestically.

• Alternatively,StandbyLettersofCredit(abankguaranteesthedebtor’screditqualityandrepaymentabilities)andguaranteebondsconstitutereliableguaranteeswhichcanbeinterpretedasasignofgoodfaithsincetheycanbetriggeredasa‘paymentoflastresort’iftheclientfailstofulfilacontractualcommitment.

Also,confirmedDocumentaryLettersofCredit(adebtorguaranteesthatacertainamountofmoneyismadeavailabletoabeneficiarythroughabankoncecertaintermsspecificallyagreedbythepartieshavebeenmet)maybeconsidered.

• BillsofExchange(cambiali)aregenerallyusedasdebtrecognitiontitlesratherthanaspaymenttools.Ifleftunpaid,theyconstituteenforceableinstrumentswhichcanbeusedagainstthedebtorwithouthavingPaymentInjunctions.

• Itisalsocommonforchecks(assegni)tobeusedthiswayand,ifleftunpaid,theyareenforceablewithinamaximumperiodofsixmonthsfromtheduedate.Since2006,unpaidchecksmustfurthermoreberegisteredwiththeCentraled’AllarmeInterbancaria(inwhichcasethedebtorwouldbeexcludedfromthebankingsystemforsixmonths).

• PaymentwouldoccurthroughRIDserviceswhichallowcollectingreceivablesfromthedebtor’sbank,basedonanauthorizationgrantedbythebuyerandrequestingtheirbanktoacceptdebitorders.Alternatively,bankreceipt(alsocalledRI.BA.)isafinancialinstrumentusedforbusinessmanagement,opentoall,whichallowscreditorstoreceiveasumofmoneyrelativetoaspecificinvoicefromthedebtor’sbank(throughproductionofsupportingdocuments)Inaddition,itisalwaysadvisabletonegotiatedownpayments.

5

Collecting overdues

Amicable actionNegotiatingAmicablesettlement(transazione)opportunitiesshouldalwaysbeconsideredasanalternativetoformallegalproceedingswhicharelengthyandcostly.Priortocommencingformallegalaction,obtainingapaymentinstalmentagreementor,atleast,aformaldebtrecognitiontitleisalwaysworthwhileas,ifthedebtorfailstopay,thesewillthenallowthecreditortoobtainanenforceableInjunctionOrderthroughafast-trackproceeding.Inaddition,beforestartinglegalproceedingsagainstadebtor,checkingthatthedebtorisnotlistedontheOfficialRegisterofBankruptcies(PubblicoRegistrodeiFalliti)isadvisable,asitallowsverificationastowhetherthecompanyisstillactiveandwhetherrecoverychancesareatbest.Inaddition,itisessentialtobeawareofthedebtor’ssolvencystatus:ifinsolvencyproceedingshavebeeninitiated,itbecomesimpossibletoenforceadebt.

Legal action

Ordinary proceedingsMediationisnolongerapre-legalactionrequirement.Nonetheless,legaldunningoughttostartwitharegisteredDemandLetter(LetteraMonitoria)recallingthedebtor’sobligationtopaytheprincipaltogetherwithlatepaymentinterest(ascontractuallyagreedortakingalegalrateasareference).Whenthedebtisundisputed,fast-trackproceedingsmayallowdebt-relatedlitigationstobesettledwithminimuminvolvementofthecourts.First,injunctionproceedingstoobtainaPaymentDecree(‘decretoingiuntivo’underLawno.69/2009)maybecommencedprovidedthatthecreditorprovesthatthedebtiscertainandundisputed(i.e.byprovidingabadcheckoradishonoredbillofexchange,orders,invoicesandproofofdeliveryshowingthatthegoodshavebeenreceivedbythedebtor).ThecourtgrantsanOrdertoPaywithin40dayswhich,ifdisregarded,allowsaWritofExecution(Attodiprecetto)enforceablebyabailiff(ufficialigiudiziari)throughaseizureofthedebtor’sassets.Inaddition,thedecreeconstitutesavalidtitlefortheregistrationofajudicialmortgageagainstthedebtor’spropertywhichmaybetriggeredwhentheamountatstakeissufficientenoughinorderfortheproceduretobecost-effective.Objectionhowevertakestheclaimtoformalordinaryproceedings.Othersummaryproceedingsalternativelyallowtherecognitionofcreditors’rights(procedimentosommariodicognizione)providedthatundisputableevidencemaybeprovided.Theordermaybeappealedwithin30days,inwhichcasetheclaimthenleadstoaformallawsuit).WhenthedebtorcompanyhasassetsinotherEUMemberStates,aEuropeanPaymentOrderprocedurefacilitatingtherecoveryofundisputeddebts(underRegulationECNo1896/2006)maybetriggered.Inthiscase,thedemandingpartymayrequestadomesticcourttoissueanOrdertoPaywhichwillthenbeenforceableinallEuropeanUnioncountries(exceptDenmark)withoutexequaturproceedings.

Collection @ Euler HermesItisalwaysadvisedtoattemptcollectionpriortoanylegalactioninordertomaximizechancesofsuccessfulrecoveryandavoidlegalcostsanddelays.Ourkeyprincipleistocollectincloseproximitytothedebtor,usingaseriesofletters,emailsandphonecallsinthelocaldebtorlanguage.OurWorldCollectionNetworkofEulerHermesofficesandexternalprovidersareexpertsinprofessionaltradedebtcollectionandnegotiation,ensuringpositiveoutcomeswhileretainingimportantclientrelationships.EulerHermescanhandlethecompletecollectionsprocessfromamicable,pre-legalactionthroughtojudgmentandenforcement.

Whentheoptionofcommencingformallegalproceedingsremains,theclaimantmustfirstfileaclaimwiththecourt(citazione)andservesummonstothedebtor.Thedebtormayfileadefence(comparsadicostituzioneerisposta)within90daysthroughapreliminaryhearing.Thepartiesarethenaskedtoprovidebriefsandevidencetothecourt,buttheproceedingstakeplaceinvarioustime-consumingphases.Ifthedebtorfailstobringadefence,thecreditorisentitledtorequestadefaultjudgmentbutthisdoesnotnecessarilyshortentheproceedings.Italiancourtsnormallyawardremediesintheformofdeclaratoryjudgments(acknowledgingtheexistenceofaright,forinstance),constitutivejudgments(alteringtheparties’relationship),specificperformanceandcompensatorydamagesbuttheycannotawarddamageswhichhavenotbeenrequestedbytheparties.Punitivedamagesarenotavailable.Overall,formallitigationinthecaseofdebtcollectiondisputesisunsatisfactoryandpre-legalactioneffortsshouldalwaysbefavored.

Necessary documents• Notarizedpowerofattorney• Copiesordersheets• Copiesofinvoices• Relevantforwardingpapers/proofofdeliverysignedbyeitherthe

carrierorthedebtor• Originalabstractofcreditor’saccountancybook,wherethe

outstandinginvoicesarelisted(mustbelegalizedbyaNotaryPublicforItaliancreditorcompanies)

• Legalrepresentative’snameandjobprofile/companyposition

Time limitationsBusinessclaimsmustgenerallybebroughttocourtwithintenyears(‘prescrizione’underArticle2946oftheCivilCode)butvariousrulesapply.Howeverthelimitationperiodcanbeinterruptedbysendingadunningletterbyregisteredmail.Inthiscasethelimitationperiodwouldrestartfromthereceiptofthedunningletter.Claimsrelatingtofaultygoodsmustbebroughtwithinoneyearstartingfromthedeliverydatebutwithineightdaysfromthediscovery.

6

Provisional measuresWhileanordinarylawsuitistakingplace,thecreditorcanaskthejudgetoexecutethetitleonaprovisionalbasis.Provisionalmeasuresmayalsohelppreservethecreditor’sinterestspendingafinaldecisioninsofarasthecourtsmayordertheprovisionalattachmentofthedebtor’sassets.Inthiscase,thedebtorretainspropertyovertheirassetsbutlosesthefacultytodisposeofthemaslongastheproceedingscontinue.Suchprovisionalorderswouldonlybegrantedprovidedthattheclaimanthasdemonstratedtheimmediatenecessityofdoingso.Inemergencysituations,thecourtmayrenderitsdecisionexparte(i.e.intheabsenceofthedebtor),asitdeemsappropriate.

Lodging an appealDecisionsrenderedinfirstinstanceproceedingsmaybebroughttoappealwithin30daysfollowingtheirdeliverytotheparties.SincetheLegislativeDecree38/2012hasenteredintoforce,theclaimantmustobtainaleavefromthecourtdeclaringthattheappealclaimisadmissible.DecisionsrenderedinthesecondinstancemaybeappealedagainstbeforetheSupremeCourt,whichisonlycompetenttoconsidererrorsoflaw(suchasafailuretostatereasons,alackofjurisdiction,anincorrectinterpretationofthelaw,etc.).

Enforcing court decisionsAjudgmentisenforceableassoonasitbecomesfinal(i.e.whenallappealvenueshavebeenexhausted).Ifthedebtorfailstosatisfythejudgment,itispossibletorequestthecourttoordercompulsoryenforcementmeasures(processodiesecuzione)intheformofattachmentofthedebtor’sassets,orofagarnisheeorder(allowingthepaymentofthedebttobeobtainedfromathirdpartyowingmoneytothedebtor).Inpractice,recoveryagainstathirdpartyowingtothedebtorwouldtendtobemorecost-effective.Priortocommencingexecutionproceedings,theexecutiveorder(titoloesecutivo)mustbeservedtothedebtortogetherwithaformalrequesttomakepaymentwithintendays(precetto).Thisgivesthedebtoranopportunitytobringanotherdefence,thusdelayingenforcementfurther.Ifthecourtrejectsthedefence,anapplicationtoproceedtoforcedexecutionmaybefiledwiththebailiff’scourt(ufficialigiudiziari).Giventhelengthoflegalproceedingsasawhole,itisoverallstronglyadvisabletoinquireaboutthedebtor’scapacitytopaythedebtpriortocommencingalawsuit.

How long could legal action take?Undisputedclaimsmaybesettledinfourmonthsbutthetimescaletoobtainanenforceablecourtorderwoulddependonthecourt,theregionandthecomplexityofthecase.Overall,disputedlegalproceedingscouldtakethreeyearsonaverage.Asaresult,legalactionmightnotalwaysbeworthwhileandpriorityshouldbegiventopre-legalcollectionefforts.Enforcementmayalsolastforyearsasitmaydependonauctiondelays,andisalsoveryexpensive.LegalactionindebtcollectionisthesameforItalianandforeigncreditors,sothecourtsdonotrequiremoretimetodecideondisputesfiledbyforeigncreditors.

7

Litigation @ Euler HermesShouldlegalactionbenecessary,EulerHermescanprovidesupportthroughoutthelegalprocessfromjudgmenttoenforcementviaourWorldCollectionNetworkofEulerHermesofficesandexternalproviders.Legalactioncanoftenbecomplicatedandexpensive,soyouwillbeinformedofallcostspriortoanyactionandadvisedonwhichrouteisbesttotake.

How much could this cost?Asageneralrule(underArticles91-92oftheCivilProcedureCode),thecourtswouldorderthedefeatedpartytocompensatethewinningpartyforallorpartofitslitigationcosts.CourtfeesinItalyhavebeennoticeablyincreasedbythegovernmentinrecentyearsandlegalrepresentationtendstobecostly.

Alternatives to legal action

Alternative Dispute Resolution methods (ADR)AlternativeDisputeSettlementmethodssuchasmediationorarbitrationmayrepresentasignificantwaytoavoidlengthyproceedingsbeforegeneraljurisdictioncourts;howeveritisrarelyusedinItalyinrelationtodebtcollectionproceedings.

Foreign forumsGiventhedifficultytoobtaintimelydecisionsfromdomesticcourts,thepartiesmayconsidersettlingdisputesundertheauspicesofaforeignforum(i.e.aforeigncourtoraforeignlaw)asthismayhelpavoidingtheriskofanydebtor’sexceptionduringthelawsuit.ItalyisasignatorytotheRomeIRegulationonthelawapplicabletocontractualobligations,whichstipulatesthatthepartiestoacontractmay,bymutualagreement,choosethelawapplicabletothiscontract,andselectthecourtthatwillhavejurisdictionoverdisputes.ItalyisalsoasignatorytotheHagueConventionof15June1955,thelawapplicabletotheinternationalsaleofgoods,whichstipulatesthatcontractsshallbegovernedbythelawchosenbytheparties,thegeneralspiritoftheagreementandthecircumstancesofthecase.

Enforcing foreign awardsInfact,theideaofsolvingdebtthroughforeigncourtsisreasonableasforeigndecisionsmaybeenforcedinItaly,eventhoughpatiencemayberequired.Variouscircumstancesmayapply.Ononehand,decisionsrenderedinanEUcountrywouldbenefitfromparticularlyadvantageousenforcementconditions.ApartfromEUPaymentOrderswhicharenormallyenforceabledirectlyindomesticcourts,thetwomainmethodsofenforcinganEUjudgmentinItalyarebytheuseofaEuropeanEnforcementOrder(EEO,asprovidedunderRegulationECNo.805/2004)whentheclaimisundisputed,orbyregisteringthejudgmentundertheprovisionsoftheBrusselsIRegulation(44/2001).Ifthejudgmentqualifiesasanuncontestedclaim,itcanbeenforceddirectly(i.e.withoutregistration)byuseofanEEOprovidedthatthedebtorhasidentifiedassetsinthecountry.AEuropeanSmallClaimsProcedure(asprovidedbyRegulationEC861/2007)aimingateliminatingintermediatestepsmaysimilarlyberelieduponwhileenforcingdecisionsuptoEUR2,000.Iftheclaimisdisputed,theprocedureforregisteringanEUjudgmentwithdomesticcourtsisrelativelysimple.Thejudgmentholdermustapplytotherelevantcourtforthejudgmenttoberegisteredandprovidethecourtwith,amongotherdocuments,anauthenticatedcopyofthejudgment,acertifiedtranslationand,ifinterestisclaimed,astatementconfirmingtheamountandrateofinterestatthedateof

theapplicationandgoingforward.Oncethejudgmenthasbeenregistered,itcanbeenforcedasifitwereissuedbydomesticcourts(accordingtotheRecastRegulationEC1215/2012,suchanexequaturprocedureisnolongerrequiredfromJanuary2015).Ontheotherhand,judgmentsrenderedinforeigncountriesoutsideoftheEUwouldnormallyberecognizedandenforcedonareciprocitybasisprovidedthattheissuingcountryispartytoabilateralormultilateralagreementwithItalydraftedforthispurpose.Intheabsenceofreciprocalarrangements,exequaturproceedingswouldtakeplacebeforedomesticcourts.Asageneralrule,foreignjudgmentscannotbereviewedonthemeritsofthecase,butthecourtswoulddenyadmissibilityforanumberofreasons,forinstance:wheretheforeigndecisionisneitherfinalnorenforceableintheissuingcountry,deemedincompatiblewithItalianpublicpolicyorwithdecisionsrenderedbyItaliancourts,ifthedefendanthasnotbenefitedfromadueprocessoflaw,iftheforeigncourthasawardedpunitivedamages,etc.ItalyisasignatorytotheNewYorkConventionontheRecognitionandEnforcementofForeignArbitralAwardsof1958,thereforeitsdomesticcourtsoughttorecognizeandenforceawardsrenderedthroughinternationalarbitrationproceedings.

8

Handling insolvent debtors

InsolvencyinItalymaybedefinedastheinabilityofadebtortopayitsdebts.ItalianBankruptcyLawisbuiltuponvariousregulations,themainofwhichistheRoyalDecreeNo267of16March1942,whichhasbeenrecentlyamendedbytheLawDecreeno.83of22June2012(DecretoCrescita).Theinsolvencyframeworkplacesasignificantemphasisondebtrestructuringasanalternativetoliquidation,howeverinpracticebankruptcyremainsthedefaultproceedingsothatcompanyrescueattemptsarenotwidespread.Infact,multiplerescueproceduresmaybefound,whichmakestheprocesscomplex.

Insolvency proceedingsOut-of-Court proceedingsThe2012Reformlawfirstentitlesadebtorfacingfinancialdifficultiestofileanout-of-courtapplicationforcompositionbyanticipation(pre-concordato/concordatoinbianco).Negotiationonacompositionagreement(accordodiristrutturazionedeidebiti)wouldthuscommence60to120dayspriortoinitiatingformaldebtrestructurationproceedingsbeforethecourt(ConcordatoPreventivo,seebelow)asameanstoanticipatethestayofenforcementproceedingsagainstthecompany.Duringthisperiod,allexecutionproceedingsarepreventivelyfrozentillthecourtdeclarestheadmissionofthecompanytoConcordatoPreventivo.Underthe2012Reform,thedebtorretainscontroloverthecompany’sassetsandactivities(underthecontrolofasupervisor).

Alternatively,anewpre-agreedcompositionplanmayalsobeagreed(ristrutturazionedeldebito)withtheapprovalofcreditorsrepresentingatleast60%ofthedebtorcompany’sdebt.

Restructuring the debtConcordatoPreventivoproceedingsareawayforaseriouslyinsolventcompanytoavoidbeingforcedintobankruptcy.Thedebtorfilesaproposaltothecourttorepaythetotalamountoutstandingtothesecuredcreditorsandavariablepercentagetotheunsecuredcreditors.NewItalianlawdecree132/2015hasintroducedminimumpercentagesforunsecuredcreditors(40%inthecaseof‘concordatoliquidatorio,’aimedtoclosethecompany,and30%inthecaseof‘concordatoincontinuità,’aimedtokeepthecompanytrading).ShouldthecourtdecidetoadmitthedebtorintotheConcordatoPreventivoproceedings,aCommissionerTrusteeisappointedandthemeetingofcreditorsisfixedonanagreeddate.Thevotecanbecastwithin20daysfromthedateofthehearing.Asperdecree132/2015,amissingvoteisequaltoanegativevote.Ifthemajorityofthecreditoutstandingisaccepted,thecourtwillofficiallyvalidatetheproceedings(omologazione).Alternatively,theAccordodiristrutturazionedeldebitoaimsatrestructuringthedebtsoastorescuethedebtorcompanyfrombankruptcyproceedings.Anagreementmaybeconcludedbetweenadebtorandtheircreditors(Comitatodeicreditori)whilepursuingbusiness.Directorsremaininchargeofthedailymanagementunderthesurveillanceofajudicialcommissioner,andmaypresentvariousarrangementsintheformofdebtrestructuring,transferofassetsof

9

thecompanytoanassumingparty(assuntore),divisionofcreditorsintodifferentclassesaccordingtheirlegalstatusandsimilareconomicalclaims.Since2012,enforcementactionsagainstthedebtormaybestayedearlier,fromthestartoftheout-of-courtcompositionphase.Inaddition,the2012Reformprovidesimprovedopportunitiestoobtainfreshcapitalduringtherestructurationproceedings.Additionalproceduresmayalsostartdependingonthesizeandlevelofindebtednessofthecompany:Prodi’sextraordinaryadministrationproceedings(amministrazionestraordinaria)aresupervisedbytheMinistryofIndustryandapplytocompaniesthathaveatleast200employees,andthattheirdebtequalstwo-thirdsoftheirassets;Marzano’sextraordinaryadministrationproceedings(amministrazionestraordinariaMarzano)applytocompanieswithatleast500employeesthathavedebtsamountingtoatleastEUR300million.

Winding up proceedingsWindingupproceedings(fallimento)areinpracticethestandardbankruptcyprocedureoncefacinginsolventdebtors.Therequestmustemanatefromthedebtor,theircreditorsorfromthepublicprosecutorbutvariousthresholdsapply:thedebtorcompanymustbeacommercialenterprisewithinvestmentsinexcessofEUR200,000(aspertheirlatestannualaccount)andbeinginastateofinsolvencyinexcessofEUR30,000.Uponadmissionoftheliquidationrequestbythecourt,thecreditorsaregivenabouttwomonths(thetimeperiodistobesetbythecourt)toregistertheirdebtsandpriorities.Acourt-nominatedreceiver(curatore)isinchargeofestablishingthecreditors’listandtakesoverthemanagementandadministrationofthecompanyinplaceofthedirectorsuntilthecompany’sassetsaresoldandtheproceedsaredistributedamongthecreditors.Abankruptcyagreement(concordatofallimentare)may,however,beconcludedduringtheliquidationproceedingsifthepartieshaveagreedonaplanregarding(amongothermatters)therestructuringofdebts,thepaymentofcredits,theassignmentofthedebtor’sassetsinfavorofanassignee,thecomposition/paymentofaclassofcreditors,etc.Thebankruptcyjudgewouldverifythecomplianceoftheagreementwiththerelevantrulesofprocedureandobtaintheapprovalofboththereceiverandcreditors’committee.TheCompulsoryAdministrativeLiquidation(liquidazionecoattaamministrativa)procedureappliesinthecaseofcompaniesthatarenotallowedtogobankruptbylawonthegroundsofpublicinterest(forexample,banksandmajorinsurancecompanies).‘Liquidazionevolontaria’applieswhenacompanydeliberatelydecidestostopitseconomicactivities,butsuchproceedingsareregulatedundercivillaw,notunderinsolvencylaw.

Priority RulesPriorityrulesnormallyapplywhiledistributingtheproceedstothecreditors.Priorityclaims(liensovermoveableandimmoveableproperty)wouldberepaidbeforepreferentialclaimsandclaimssecuredbymortgageorbypledge.Newcapitalprovidedtothedebtorduringrestructurationproceedingsanddeemedessentialtothecompany’ssurvivalwouldalsobeconsideredasapriorityclaimunderthe2012Reform.

Cancellation of suspect transactions (clawback)Theinsolvencylaw(Articles64to70)entitlesadministratorsandreceiverstoreviewandcancelanypaymentsmadebythedebtorduringa‘suspectperiod’commencingbetweensixmonthstotwoyearspriortotheopeningoftheinsolvencyprocedure.Typically,transactionsfavoringonecreditorovertheothersorreducingtheestate’svalue(fraudulentacts,undervalueorgratuitousacts,etc.)couldthusbevoid.

How long could insolvency proceedings take?Bankruptcyproceedingscouldspreadoverfivetotenyearsonaverage,although20yearshavebeennecessaryinthemostcomplexcases.

Necessary documents• Notarizedpowerofattorney(ifclaimslodgedbyexternallawyers)• Proofofdebt(forbankruptcyproceedingsandextraordinary

administration,‘amministrazionestraordinaria’)• Copiesordersheets• Copiesofinvoices• Relevantforwardingpapers/proofofdeliverysignedbyeitherthe

carrierorthedebtor• Originaloutstandinginvoices(mustbelegalizedbyaPublicNotary

forItaliancreditorcompanies)• Legalrepresentative’snameandjobprofile/companyposition

Insolvency @ Euler HermesEulerHermesworkscloselywithdebtors,creditorsandlawyerstoprovidesupportduringinsolvencyandrestructuringprocesses.Withmanyoptionsavailablewhenitcomestoinsolvencyaction,wecanofferadviceonwhichoptionismostsuitable.

10

Coun

tryP

rofil

e:It

aly

ThisCollectionProfileispublishedbyEulerHermes,acompanyofAllianz,forinformationpurposesonly.Theinformationprovidedthereinshallnotberegardedasprovidinganylegaladviceoradviceofanykind.Readersshouldmaketheirownindependentevaluationofthisinformationandundernocircumstancesshallanyactionbeundertakensolelyrelyingonit,whilelegaladviceshouldbesoughtwithlegalpractitionersatalltimes.Whilethisinformationhasbeencollectedanddraftedbyrecognizedexpertsintheirfieldanditisbelievedtobecorrectandreliable,EulerHermesmakesnowarranty(expressofimplied)ofanykind,inregardstotheaccuracyorcompletenessofthisinformation,nordoesitacceptanyresponsibility or liability for any loss or damage arising in any way from any use made of, or reliance placed on, thisinformation.Thismaterialshouldnotbereproducedordisclosedwithoutourconsent.ItisnotintendedfordistributioninanyjurisdictioninwhichthiswouldbeprohibitedandCollectionProfilesaresubjecttochangewithoutnotice.

©Copyright2017EulerHermes.Allrightsreserved.

EulerHermes,acompanyofAllianz,leaderincreditinsurancesolutionshelpingcompaniesgrowtheirbusinesssafelyathomeandabroad,providesglobalcommercialdebtcollectionserviceswith trueend-to-endcapability.EulerHermesoffers both domestic and international trade debt collection services worldwide. Through our network, we use ourexperienceandknowledgeoflocalmarketstoensureaprofessionalserviceforourclientsfrompre-legalactionthroughtolegalproceedings.

VisitEulerHermesatwww.eulerhermes.com