liability for this breach, due to the difficulty in proving causation. However, courts may impose liability
for negligent mismanagement in not having acted to prevent losses.
Duties imposed on directors apply equally to those who, although not formally appointed to the office,
carry out de facto management activities or are involved in the running of the company.
Extraterritorial Jurisdiction/Enforceability
Recognition of Foreign Insolvency Proceedings
Italian Courts may recognise the existence of foreign insolvency proceedings or an order of a foreign
Bankruptcy Court, provided that the following principles are satisfied:
• The foreign court has international jurisdiction over the case; and
• Such foreign proceedings or orders do not produce effects which are contrary to Italian public
policy (“ordre public”).
5
Neither the Italian Bankruptcy Law nor Law no. 218 of 31 May 1995 concerning the modification of the
Italian system of international private law contain any specific rule relating to international jurisdiction
over insolvency proceedings.
Additionally, Council Regulation (EC) no. 44 of 22 December 2001, on jurisdiction and recognition and
enforcement of judgments in civil and commercial matters (both enforced in Italy), cannot be applied
to bankruptcy, winding-up proceedings, judicial arrangements, composition and analogous
proceedings. Nor has this provision been amended by Regulation no. 1215/2012 of the European
Parliament and of the Council dated 12 December 2012.
Article 3, paragraph 1, of the Council Regulation (EC) no. 1346 of 29 May 2000 (the “EC Bankruptcy
Regulation”) provides that the court of the member state “within the territory of which the centre of the
debtor’s main interests is situated” is competent to commence the main insolvency proceedings.
“Centre” refers to, in the case of a company or legal entity, the place of its registered office.
6
As set forth in Article 3, paragraph 2, the courts of a member state in which the debtor has a
permanent establishment can initiate secondary insolvency proceedings against a debtor whose
centre of main interests is within another member state. In such an event, the effects of the secondary
proceedings are limited to the assets situated in the territory of the first member state and aimed at
the liquidation of the insolvent company.
On 20 May 2015, the European Parliament and the Council enacted the EU Regulation no. 848/2015
(the “Recast Bankruptcy Regulation”), which entered into force on 25 June 2015 and will be
applicable to insolvency proceedings starting from 26 June 2017, with few exceptions (Articles 24, first
paragraph, 25 and 86).The new rules also apply to proceedings which provide for the restructuring of
a debtor, the so-called “hybrid proceedings”, for example the Italian debt restructuring arrangements
pursuant to Article 182-bis of the Bankruptcy Law.
5
Italian legal commentators distinguish between “international public policy” (which refers to the general principles that are
universally enforceable, namely the inviolable rights of the individuals) and “internal public policy” (which includes the
ethical, economical, political and social principles peculiar to the Italian legal system). Only the first is relevant with respect
to the recognition of proceedings.
Article 26 of the EC Bankruptcy Regulation prevents any member state from recognizing an insolvency proceeding and
enforcing a judgment relating to it if they are manifestly contrary to the relevant state’s public policy, “in particular to its
fundamental principles or the constitutional rights and liberties of the individual”.
It is worth underlining that Article 26 of the EC Bankruptcy Regulation contains a general definition of “international public
policy”, which is deemed to be the fundamental principles of any member state, as well as the constitutional rights and
liberties of the individual.
6
Pursuant to Article 2(a) and (c) of the EC Bankruptcy Regulation, insolvency proceedings which may be commenced in
Italy are the fallimento, concordato preventivo, liquidazione coatta amministrativa and amministrazione straordinaria. The
fallimento and liquidazione coatta amministrativa are considered to be “liquidation proceedings”.
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