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

Author/Editor:

Nazim Belhocine ; Daniel Garcia-Macia ; José Garrido

Publication Date:

September 28, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

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.

Series:

Working Paper No. 18/218

Subject:

English

Publication Date:

September 28, 2018

ISBN/ISSN:

9781484378427/1018-5941

Stock No:

WPIEA2018218

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

34

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