1.1 Amicable Phase

1.1.1 General

Accounts Receivable Italy maintains a professional demeanor throughout its collection process, as our focus is to maintain a healthy relationship between the client and the debtor. All of our operations are performed in-house, and we contact debtors both in writing and orally. We focus on reaching amicable solutions, even during a dispute, by focusing on existing contracts, orders, and invoices, to produce results. Our legal team assists with our investigations to produce a well-rounded approach.

1.1.2 Local agent

Accounts Receivable Italy maintains a selected network of field agents who are able to make direct contact with debtors through personal visits. The goal of these visits is to acquire additional information about the debtor’s financial situation, and is typically successful when pursuing lower overall debt amounts.

1.1.3 Interest

It is our policy to charge interest on the amounts that we collect. The rate charged to debtors is 8 percent on a daily basis, as directed by European Directive 2000/35/CEE, passed in October 2002. Interest is requested during both the amicable and judicial phases of the collections process, though Italian debtors rarely agree to make such payments. Interest is typically used more as a negotiation tool to encourage debtors to make prompt payment on their debt’s balance.

1.1.4 Debt collection costs

Contact laws require a signed collection convention between Accounts Receivable Italy and the creditor in order to collect charges associated with debt collection activity. Legal tariff of lawyers must be specified in this document, and failure to do so will render it void. These costs cannot be claimed in court, and Italian culture is strongly opposed to paying them, making their addition to the debt’s balance quite difficult and potentially pointless.

1.1.5 Prescription

The statute of limitations in Italy is ten years, though this can be interrupted by the creditor’s notification to the debtor when requesting payment. If an interruption is instituted by the debtor, statute of limitations would be recalculated based on the interruption itself. For shipping contracts, a different statute of limitations applies and lasts one year. For transport from non-European countries, the limit increases to 18 months.

1.1.6 Accepted and most common payment methods

Payment via bank transfer or cheque is accepted. Bank drafts issued directly by the debtor are also accepted.

1.1.7 Types of companies

Italian companies are classified as either companies or partnerships.

Partnerships include:

Società semplice (ss):

Partners are not liable, and the company has to be registered in a special section of the Registro delle Imprese.

Società in nome collettivo (s.n.c.):

Partners have unlimited liability for debts, and the partnership must be registered.

Società in accomandita semplice (S.a.s):

Unlimited liability only applies to a declared non-limited partner, and this company must be registered appropriately.

The companies include:

Società a responsabilità limitata (S.r.l.):

Registered with the Registro delle Imprese, this company must have at least 10,000.00 EUR in capital. Partners enjoy limited liability.

Società di capitali (S.p.a.):

This registered company has limited liability partners and a minimum capital requirement of 120,000.00 EUR.

Società in accomandita per azioni (S.a.p.a.):

Partners can be subject to either limited or unlimited liability. There are no minimum capital requirements, and the company must be registered with the Registro delle Imprese.

For sole proprietorship, the individual company owner has unlimited liability for the debts incurred by that company. This applies primarily to farmers, craftsmen, and entrepreneurs.

1.1.8 Sources of information

Accounts Receivable Italy actively monitors the solvency of a debtor and the financial situation of a company. In order to ensure an accurate investigation, we check the Chamber of Commerce for information and request that our clients provide us with any of their own research as it concerns bank accounts, booked goods, vehicles, crafts, estates, and an estimation of public registers. We trace debtors using Town Council registries and private investigators when necessary.

1.2 Retention of Title

This is not applicable to debtors in Italy.

1.3 Safeguarding measures

It’s important to get a signed acknowledgement of the debt during the amicable phase of collection, as this allows the company to obtain an injunction against the debtor and enforce collection of the debt’s balance. Accounts Receivable Italy can also ask the debtor for a title in order to create a payment plan. This helps to skip the first step of the process, reducing the time and costs associated with the process. Securitization of the debt can also be obtained via the debtor’s mortgage and registered through a contact with a local notary.

1.4 Legal Procedures

1.4.1 General

Accounts Receivable Italy has access to a large network of lawyers who can act in the interest of the creditor and pursue judicial collection activities against the debtor. This begins with an initial notification sent to the debtor by the lawyer indicating that legal action will begin. The debtor can either pay the debt or reply to the letter; if a reply is not received, the judicial phase begins immediately with the issuance of an injunction decree.

1.4.2 Legal System

Italy uses a civil law system, and collections procedures are governed by the Italian Civil Code, as well as the regulations set forth in the commercial Civil Action Code.

Origination of the case is based largely on the amount of money owed to the creditor, with smaller amounts being the jurisdiction of the Justice of the Peace. Larger amounts proceed through a one-judge tribunal or a full tribunal depending on their size. Legal action usually starts in the home court jurisdiction of the debtor.

Civil Actions are rarely used to collect a debt subject to a written invoice, as the procedure can be extremely long and ineffective. Its length makes it expensive, as well, and most companies simply don’t want to invest such a large sum of money in their collections proceedings.

Civil Action is generally used to determine whether or not credit is due between two parties. For simpler matters, like credit based on documents, a simpler summary judgment process can be pursued. This process requires limited interaction with a judge and is both quicker and more affordable.

1.4.3 Required documents

To begin legal action to collect a debt, we must have the following documents:

- Copies of unpaid invoices
- Copies of transport documents
- Copies of relevant accountancy book entries, authenticated by a notary
- Original Power of Attorney document, signed by the creditor’s representative(s)

1.4.5 Lawsuit

Legal action begins when the creditor files the Petition of the Injunction Decree. This is filed in the Chancery and includes all of the documents necessary to validate the claim and issue such an injunction. The judge will examine the petition and issue an injunction decree if he does not dispute the submitted information. The documents submitted are retained by the Chancery, and copies are submitted to the debtor. The debtor has 40 days to dispute the injunction. If a dispute is filed, a civil trial begins. If not, payment is enforced via judgment.

The creditor can begin forced execution of the debt within 90 days of the injunction. If the debtor still does not pay, the creditor’s lawyer will file an Executive Injunction Decree. A bailiff will be notified as a result of this filing.

The creditor can then file the Writ of Execution to collect the debt, but only if they have outstanding invoices or promissory notes. If the debtor objects to this writ, a civil trial starts. If not, the injunction is executed.

1.4.6 Appeal

Appeals of civil action decisions can be filed with the court local to the jurisdiction where the original judge resides. It can also be filed with Italy’s Supreme Court.

An appeal must be filed within 60 days of notification of the judgment. If there is no such notification, then the appeal can be filed within six months of the judge’s decision being issued.

1.4.7 Costs

Costs of the civil action procedure depend largely on the outstanding balance of the debt and are calculated into separate amounts for each party. Due to the nature of fees incurred during the process, it’s hard to estimate an average cost for clients. This analysis is best done on a case-by-case basis.

1.4.8 Expected timeframe

Civil legal action in Italy typically takes about eighteen months, though civil matters can take as long as two or three years based on the complexity of the case.

1.4.9 Interest and costs in the legal phase

An injunction decree will include the outstanding balance as well as legal fees available for collection by the creditor. They will be notified that payment of the full amount is required. The party who loses any civil action will be responsible for paying the legal costs associated with the procedure.

1.5 Enforcement

1.5.1 Enforcement in debt

To begin enforcement, an act of the creditor must be signed by the bailiff nearest the debtor’s physical address. It is the bailiff’s job to notify the debtor and any third party of the enforcement procedures. The act of the creditor must confirm details relating to the goods and items subject to the enforcement action. The judgment can pertain to bank accounts, goods located at third-party locations, and the garnishment of wages or pensions where allowed by law.

1.5.2 Enforcement in movable goods

The bailiff will visit the debtor at his or her physical address to determine whether or not goods can be seized to aid in the satisfaction of the debt. Laws regulate this process and mandate the following:

The bailiff visits the debtor at his address to find out if goods can be seized. It is foreseen by the law that:

- Execution cannot be made of certain goods or essential items
- Bailiff visits most occur only during times of day permitted by law
- Bailiff visits cannot be made during holidays
- Goods taken by a bailiff will only include money, jewelry, and credits. Anything else must be taken by an official receiver
- Costs are fixed and depend on the value of the goods found by the visiting bailiff

1.5.3 Enforcement in immovable goods

The creditor can value the debtor’s immovable goods, and the creditor can petition for a sale of those immovable goods to recover the balance owed. This is extremely expensive, however, and takes a very long time. Many creditors opt not to seize immovable goods in all but the most extreme cases.

1.5.4 Expected timeframe

Enforcement of the debt as it involves immovable goods can take several years and cost as much as 100,000.00 EUR. This makes it impractical in many cases, and prohibitively expensive for most creditors.

1.6 Insolvency Proceedings

1.6.1 General

An insolvency proceeding can begin at the court located closest to the debtor’s main office when a request for such a proceeding is filed by the debtor, their creditors, or the Public Prosecutor. Insolvency proceedings typically deal with bankruptcy and judicial composition with creditors.

1.6.2 Proceedings

Insolvency proceedings proceed in one of two ways in Italy:

1. Bankruptcy. Not all debtors can be declared bankrupt in Italy, and this procedure seeks to determine whether or not bankruptcy is applicable to the debtor’s situation. Generally, individual shops, small debtors, farmers, and owner-managed firms cannot be declared bankrupt. A creditor can only ask for the bankruptcy of a debtor when their credit exceeds 30,000.00 EUR and the debtor has a minimum turnover of 200,000.00 EUR. The debtor also must not have been removed from the Chamber of Commerce for more than one year. If these conditions are met, the bankruptcy proceeding can continue.

2. Composition with creditors. Essentially, this process focuses on restructuring the company so that it is placed in a position where it can more readily pay its debts and satisfy its creditors. This process is subject to majority-approval by the company’s creditors and must be validated by the court. After validation, an appointed insolvency practitioner liquidates the company’s assets according to the established restructuring and repayment plan.

1.6.3 Required documents

To file a bankruptcy claim on behalf of our clients, we need the following:

- Copies of unpaid invoices
- Copies of transport documents signed by the debtor
- Notarized copies of relevant accountancy documents
- Verification of the amount of the credit, in the case of a composition hearing

1.6.4 Expected timeframe and outcome

On-time petitions must be filed at least 30 days before the first hearing of the case by the court. Late petitions can be filed within 12 months of the issued enforceability decree made by the courts. The total duration of bankruptcy proceedings in Italy typically averages between six and seven years. Composition proceedings can take between two and three years.

1.6.5 Limited companies

The filing of bankruptcy for a limited company only applies to the company itself and not to the individual responsible for the company’s operations.

1.6.6 Non-Limited companies/individuals

The partners involved in non-limited companies are declared bankrupt by the same decree that declares their company bankrupt. The court will appoint a judge and a trustee to execute this process. A minor entrepreneur cannot be considered bankrupt by the company’s regulations.

1.6.7 Pool of creditors

The pool of creditors in Italy is appointed within 30 days of the bankruptcy ruling and is charged with holding the trustee accountable for their decisions. The pool consists of between three and five creditors who are considered most representative of the company’s debts and interests. The pool will authorize any of the trustee’s actions and give relevant advice for the case as stipulated by Italian law or the request of the judge overseeing the case. These decisions are subject to majority vote, and have a 15-day deadline.

1.6.8 Rescission

Two types of payments can be disputed:

- Payments made by the debtor to a creditor during the year prior to the bankruptcy proceeding, specifically those that prove the creditor did not know the debtor’s financial status

- Miscellaneous payments made by the debtor to the creditor within six months of the bankruptcy proceeding where the trustee can prove that the creditor knew the debtor was insolvent.

Any payment disputed by the trustee under these two laws must be refunded by the creditor.

1.7 Arbitration and Mediation

A creditor and debtor can use one of these alternative methods to resolve any disputes they might have before extensive court action is taken to collect and satisfy a debt.

1. Arbitration

The dispute is managed between the debtor and creditor, while an unbiased third party presides over the matter. This can only occur when an arbitration clause is featured in the original contract between the debtor and the creditor. Otherwise, competency of the arbitration could be called into question and invalidate the process itself at some later point.

2. Mediation

While mediation used to be an optional step taken by some creditors and debtors, it has recently been mandated as a required step in some cases. In many cases, mediation is actually a highly attractive alternative to litigation as it offers a resolved dispute in as little as four months. The costs associated with mediation procedures are far lower than those incurred by companies who proceed with a lawsuit, and the outcome is enforceable by law just as a lawsuit’s outcome would be. A third-party mediator oversees the entire process and facilities an agreement between the two parties in a way that is both amicable and easy to follow, allowing both parties to have their concerns heard and get a fair repayment and collection deal.

To get started today, call us at321-710-3530 to speak with an associate
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