At least this time less adjustment was needed. The first big reworking of Italy’s insolvency laws came after massive accounting fraud was unearthed at food conglomerate Parmalat Finanziara S.p.A. in 2003. The previous insolvency regime was more than 60 years old and recognized by most as badly outdated. “Traditionally, the bankruptcy law was tailored to liquidating companies rather than restructuring them,” says Fabio Guastadisegni, a bankruptcy partner with Clifford Chance in Milan.
After the Parmalat fraud came to light, the Marzano law–named after former Italian minister of industry Antonio Marzano–was adopted by the Italian government to enable large companies to keep operating after they have filed for bankruptcy. A series of amendments to the country’s bankruptcy law between 2005 and 2007 also radically overhauled the restructuring process. Distressed companies and their advisers now have a series of options before and during bankruptcy that are designed to help companies avoid liquidation. Insolvency in Italy is looking more American–albeit with some important differences that have as much to do with Italy’s economy as with its legal system.
