The Company may be declared bankrupt on its own motion or on a petition filed by any creditor or by the Public Prosecutor.
The Bankruptcy Court appoints a Judge to supervise the proceeding and a receiver to administer the assets and business of the Company.
The bankruptcy receiver is not a representative of any one of the creditors, but is responsible for the liquidation of the assets of the debtor for the satisfaction of the creditors as a whole.
On the commencement of bankruptcy proceedings:
- all actions of creditors are stayed and creditors must file any claims for their debts within a prescribed period;
- the administration of the debtor company and the management of its assets pass from the debtor company to the bankruptcy receiver (curatore fallimentare); and
- any act of the debtor company done after a declaration of bankruptcy (including payments made) is ineffective against the creditors. Although the general rule is that the bankruptcy receiver is allowed (with the authorization of the creditors’ committee) to either continue or terminate contracts where some or all of the obligations have not been performed by both parties, certain contracts are subject to specific rules expressly provided for by Italian Bankruptcy Law.
The receiver can exercise avoiding powers with respect to transactions carried on by the Company before the declaration of insolvency.
The continuing operation of the business, also through a sale of business as a going concern (in full or in part) is possible in the bankruptcy liquidation, if favorable to creditors.
The proceeds from the liquidation are distributed to creditors in accordance with statutory priority.