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Italy

Financial difficulties

Updated 03/2013

Legal requirements

Periodically the State provides funds to support businesses in difficulty.

This funding is intended for the benefit of businesses in difficulty, that is, businesses that are not capable, with their own resources or with the resources available from third parties (owners/shareholders or creditors), of covering their losses which, in the absence of public funding, would almost certainly lead to bankruptcy.

The Ministry for Economic Development helps firms in difficulty, providing them with various categories of instruments to deal with the crisis. Among these are:

In the case of businesses belonging to a Group, the aid can be allocated only if it is demonstrated that the difficulties are specific to the individual business forming part of the group.

Stabilizing a company

Access to finance

Except for the cases listed in the law supporting production activities as part of the Action Plan for economic, social and territorial development, Italy does not provide specific access to finance to businesses in difficulty, on the contrary, the legislator is concerned to encourage the creation of new employment.

Private banks provide Loans to companies in financial difficulties only after careful assessment of the financial and ability to repay.

Restructuring debt

The owner of a business in crisis can request the approval of a debt restructuring agreement stipulated with the creditors who represent at least seventy per cent of the debt, together with a report drafted by a professional on the feasibility of the agreement itself. The restructuring plan has to be monitored, throughout the whole process, by the business as well as by specialized advisors and auditors.

During the course of the negotiations and before the formalisation of the agreement, creditors may not initiate or proceed with precautionary or executive actions against the debtor’s assets.

Protecting Employees

For some specific sectors, the employees of businesses in financial difficulty receive State subsidies in the form of ordinary income supplement (CIG) and extraordinary income supplement (CIGS). From 1 January 2013 the employee is protected by the new Aspi (Social Insurance for Employment) and the mini-Aspi, which replaces the old unemployment benefits.

Redundancy benefits are ordinary when the suspension or reduction of the business activity is due to temporary and transitory events which cannot be attributed to the employer or the employees.

The CIG is extraordinary when the company undergoes restructuring, reorganisation or conversion processes, company crises or is subject to bankruptcy procedures.

Ordinary redundancy benefits are paid to workers, labourers, employees and executives of the companies that generally carry out industrial and handicraft activities.

The new Law No 92 of 28 June 2012 introduces new provisions on the CIG, as well as extends the application of the extraordinary CIG to other categories of companies such as:

  • companies carrying out commercial activities with more than 50 employees,
  • security companies with more than 15 employees,
  • air transport companies,
  • airport system companies.

Access to different sources of finance can help overcome financial difficulties.

When filing for bankruptcy is the only option left for a business owner, it pays to cut your losses, initiate proceedings sooner rather than later, and move on to a new project.

Administrative procedures

ASPI AND MINI-ASPI

The Aspi, which refers to the Social Insurance for Employment, replaces the old unemployment benefit, thus protecting workers who have been dismissed.

The mini-Aspi, however, caters for all those who have been dismissed and who have acquired at least 13 weeks of contributions in the 12 months prior to the abandonment of the workplace.

The Aspi caters for:

  • employees,
  • apprentices,
  • working members of the cooperative,

Deferment of payment

In case of a temporary situation Of objective difficulty, the Company Equitalia Spa, in charge of tax collection may grant the deferral of payments due to the Agenzia delle Entrate up to a maximum of 72 monthly installments (6 years).

Dismissals

There are two main types of dismissals:

  • Dismissals individual - other than in the cases of directors and workers on a trial period, the dismissal must be justified and objective.  Companies with fewer than 15 employees benefit from some exceptions to the general regulations related to dismissals. On the contrary, companies with more than 15 employees are subject to a specific procedure, subject to sanctions.
  • Dismissals collective - are required due to objective needs of the company and are only possible for companies with at least 15 employees and when at least 5 employees are dismissed in a limited period of time (usually 120 days). Some procedural issues have been reformed by  Law No 92 of 28 June 2012.
Help & advice

Help & advice

The Camere di Commercio (Chambers of Commerce) can provide funds to companies in difficulty. These initiatives are often undertaken on a regional basis and may take the form of microfunding or concessions for access to bank credit. The Chambers of Commerce also provide information and assistance on all other funding opportunities and facilitate the mediation with the banking system.

Other funds, for example in the form of soft loans, may be issued in favour of small and medium-sized companies from other public organisations and institutions. These funds are often managed at the regional level and therefore depend on the region where the business is based.

E-mail a business organisation near you

The EU runs a network (Enterprise Europe Network) of local business organisations in most European countries that may be able to help you.

Choose your country and town and enter your enquiry below.

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