The New Italian Bankruptcy Law: The Right Way to Reform Insolvency Procedures

The recent Italian Bankruptcy Reform (d.lgs. 9 gennaio 2006, n. 5) has been adopted to modify the old insolvency system, existing since 1942, in order to facilitate the resolution of firms' distress through the implementation of faster insolvency procedures and an increasing adoption of the reorganization plans. The first part of the research shows the insolvencies in some European countries over the last decade and the trend of the main Italian insolvency procedures. The second part of the paper describes both positive and critical aspects of the recent Italian Bankruptcy reform, while the third part aims at evaluating its effectiveness. The empirical evidence shows an increase in the adoption of the reorganization plans compared to liquidation procedures. The new law has a positive impact on the Reorganizations/Liquidations ratio, both in terms of new and closed proceedings. However, the empirical results show that the efficacy of the reform depends on the quality of the civil justice, that is the judges' productivity in each court. Some policy implications conclude the work.