Reforming Italian Insolvency Law: Bankruptcy vs Judicial Liquidation

Abstract

The Italian Parliament has recently approved the Enabling Law no. 155/2017, which draws on the results of the work of the so-called Rordorf Commission, previously established by the Minister of Justice with the task of preparing a general reform proposal on corporate rescue and insolvency (Reform Law). Among the interventions envisaged, the Reform Law provides for the elimination of the term “bankruptcy” from the Italian insolvency panorama and the replacement of the bankruptcy proceeding with a new procedure, called “judicial liquidation”. The explanatory memorandum says that the decision to abandon the term “bankruptcy” aims to avoid the social stigma historically related to a person being declared “bankrupt” even though this is not justified by the mere fact of an entrepreneur failing to achieve a successful outcome. There is no doubt that an entrepreneurial crisis cannot be considered incontrovertible proof of inherently antisocial and illegal conduct. Nevertheless, experience shows that entrepreneurs who are declared bankrupt are strongly discredited by dint merely of the bankruptcy, even when their honesty is indisputable. The following pages will thus verify the elements of discontinuity between the “old” bankruptcy and the “new” judicial liquidation, in order to understand whether the transition from the former to the latter actually represents a cultural revolution or should instead be regarded as merely a cosmetic reworking of the regulations.