The Insolvency Regime for Large Enterprises in Italy: An Economic and Legal Assessment
IMF Working Papers, September 28, 2018
Source details
- Canonical URL
- The Insolvency Regime for Large Enterprises in Italy: An Economic and Legal Assessment
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Bibliographic details
- Authors: Nazim Belhocine, Daniel Garcia-Macia, Jose M Garrido
- Published: September 28, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484378427.001
Executive summary and purpose
- Evaluates the special regime for large enterprises in Italy known as “extraordinary administration.”
- Assesses efficacy and success in achieving stated goals and compares features to international standards and best practices.
- Publication details:
- By Nazim Belhocine, Daniel Garcia-Macia, Jose M Garrido
- September 28, 2018
- Working Paper No. 2018/218, Issue: 218, Volume: 2018, Pages: 34
- DOI: https://doi.org/10.5089/9781484378427.001
- ISBN: 9781484378427
- ISSN: 1018-5941
- Stock No: WPIEA2018218
Key findings
- The special regime (“extraordinary administration”) tends to impose large costs on creditors and the state.
- Typical case outcome:
- Sale of parts of the group, followed by a liquidation phase of the remaining assets.
- Liquidation under the special regime can take longer than under the general regime.
- Economic and legal consequences:
- Longer liquidation hinders legal certainty for creditors.
- Adverse effects on economic efficiency, investment, and job creation.
- Comparative assessment:
- Features of the special regime depart from some international best practices and standards.
Analysis and interpretation
- Mechanisms leading to outcomes:
- The structure and procedures of extraordinary administration favor partial sales and extended liquidation.
- Extended timeframes reduce predictability for creditors and market participants.
- Distributional impacts:
- Creditors bear large costs.
- The state incurs significant fiscal and administrative costs.
- Broader economic implications:
- Reduced legal certainty and prolonged processes can dampen investment and employment prospects.
Policy recommendations
- Consider folding the special regime into the general insolvency regime.
- If retained elements of extraordinary administration are necessary, limit them to:
- Well-defined circumstances that permit state intervention.
- Clear procedural safeguards to reduce duration and costs.
- Align reforms with international best practices and experience to improve outcomes for creditors, the state, and the economy.
Subject coverage and keywords (as presented)
- Subjects: Administration in revenue administration, Corporate insolvency, Economic sectors, Employment, Financial crises, Financial sector policy and analysis, Labor, Revenue administration, Solvency, Special resolution regime
- Keywords: Administration in revenue administration, aid support, bankruptcy of large enterprises, business activity, company group level, competition authorities, Corporate insolvency, Employment, enterprise court, Europe, extraordinary administration, insolvency regime, large enterprise, Marzano firm, restructuring company, Solvency, special insolvency regime, Special resolution regime, State aid, State guarantee
Source: IMF Working Paper No. 2018/218 (September 28, 2018).