ITALIAN COMPANIES at the end of the rope: HALF A MILLION at RISK OF BANKRUPTCY (43% of the total!)

The Italian Revenue Agency has launched the action to recover 2.4 billion of dormant debts. There are 500,000 companies at risk of default

Credits Skitterphoto - pixabay - A bankrupt company

With the decay of the scrapping “ter”, the Agenzia delle Entrate (the Italian Revenue Agency) has restarted the collection machine to recover 2.4 billion of dormant debts. At risk of default there are 500,000 companies as documented by the italian financial newspaper ItaliaOggi.

ITALIAN COMPANIES at the end of the rope: HALF A MILLION at RISK OF BANKRUPTCY (43% of the total!)

# 43% of companies risk going bankrupt following the decay of scrapping “ter”

Credits ilconsulente_del_lavoro – Italian Revenue Agency

In recent days, the collection agent’s machine has restarted to recover 2.4 billion of dormant debts following the forfeiture of the scrapping “ter”. At risk of bankruptcy are 43% of taxpayers, at least 500 thousand companies, unable to pay the installments of previous and suspended taxes following the Covid-19 emergency regulation and who are being notified via Pec (an Electronic Certified Mail that gives you proof your message arrived) in record time of the payment orders of the residual due, including penalties and interest.

The time allowed for the settlement of the debt is only 5 days, without the possibility of deferral or other tolerances, under penalty of enforcement and precautionary procedures such as administrative stops, mortgages and foreclosures. The remaining 57% of taxpayers are not in better conditions given that by 7 March they are required to pay the installment of the scrapping plans “ter” not lapsed with a tolerance of 5 days allowed by the Italian Revenue Agency.

# Firms are forced to resort to non-tax systems to avoid default

Credits Tama66 -pixabay – Industry

The main obstacle is that the debt has returned to its nominal values, increased by penalties and interest, given that the tax burden registered in the role has been restored and restated and therefore the payments already made and acquired as an advance payment are not valid in the procedure, as the scrapping ter extinguishes the entire debt only if paid in full.

To avoid plunging into the abyss, companies are obliged to resort to non-tax liabilities to block payment of the amount due, stop foreclosures and executive actions or, if possible, pay the balance and write off the residual debt. The Italian government had tried in the summer of 2021 to introduce tools to avoid corporate default, such as the CNC (Negotiated composition for the solution of the business crisis) which allows the entrepreneur, on a voluntary basis, to request the appointment an independent expert who facilitates negotiations with creditors.

Unfortunately, the precautionary measures to protect corporate assets through the CNC can take up to 50 days to be operational, and therefore incompatible with the 5-day margin granted by the Revenue Agency to pay off debts, therefore entrepreneurs are forced to opt for the arrangement with creditors with reservations (CPR). Through this procedure they can request the approval of a debt restructuring agreement instead of continuing with the full arrangement with creditors (former art.160 lf – bankruptcy law) and in both cases it will then be possible to propose the contribution and tax debt settlement (art.182 ter lf – bankruptcy law), which allows the write-off up to a sum no less than what the tax authorities and social security institutions would obtain in the alternative bankruptcy.

FABIO MARCOMIN