PAC (preventive arrangement with creditors): A tool to safeguard the enterprise value

Alessandro Danovi, Patrizia Riva, Marina Azzola

Risultato della ricerca: Contributo su rivistaArticolo in rivistapeer review

Abstract

Italian Insolvency Law has been widely reformed since 2005 in order to introduce new legal procedures aimed at preserving troubled companies, discerning viable from irredeemable businesses, and increasing productivity through a more efficient management of insolvency proceedings. The excessive duration of bankruptcy cases was repeatedly brought to the attention of the European Court of Human Rights, relating to the right to a fair trial in terms of reasonable duration. After the reform, the Preventive Arrangement with Creditors (Concordato Preventivo) became Italy’s equivalent of US’s Chapter 11 and can be considered the main instrument used by small and medium-sized companies (and sometimes large ones) to manage insolvency by avoiding bankruptcy. This paper provides an empirical analysis on filing of Preventive Arrangements with Creditors in the Court of Milan, one of the largest courts in Italy, in the 2005-2014 period. Through the exam of 720 cases, 60% of the total number, the research shows the different features of the procedure, analyzes the characteristics of companies that resort to it and its diverse purposes of liquidation or restructuring. Due largely to the newness of the legislation, along with the complexity of the Italian system, it is rather difficult to generalize conclusions. Nevertheless, the paper shows how Preventive Arrangements with Creditors can be considered a more efficient instrument than the alternative bankruptcy, both in terms of timeframe as well as with creditors‘ satisfaction. As part of the overall European reform process of insolvency proceedings, following the 2014 Recommendation issued by the European Commission, Italy seems to provide useful insights for other countries in Europe.

Lingua originaleInglese
pagine (da-a)117-134
Numero di pagine18
RivistaInternational Journal of Business Research
Volume16
Numero di pubblicazione2
DOI
Stato di pubblicazionePubblicato - 2016

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