Characteristics and duration of bankruptcies and composition with creditors in Italy

Using data from the Ministry of Justice, this paper presents new evidence on the functioning of the main insolvency procedures in the Italian legal system – bankruptcy and joint composition with creditors. We find that about 44 per cent of bankruptcy procedures are closed without any distribution of proceeds, with significant regional differences (35 per cent in the North and more than 50 per cent in the Centre and South of Italy). Procedures last on average about seven years – almost nine years if there is a distribution of proceeds, five years with no distribution. The duration is longer in the South, regardless of the outcome; the longest stage of the procedure is the liquidation of assets. Regarding compositions with creditors, only 20 per cent of composition plans are approved, and in about 20 per cent of these cases the procedure ends in bankruptcy. Almost two-thirds of the procedures are initiated for liquidation purposes. Following the 2012 reform, the number of approved plans increased but the rate of admission decreased (suggesting they may be used for dilatory purposes); after those of 2013 and 2015, the use of the procedure declined without the rate of admission picking up.