Saggio
The Composizione Negoziata under the Test of International Law*
Andrea Angelo Terraneo, Avvocato in Milano e senior insolvency administrator in Southampton
21 Giugno 2026
*Il saggio è stato sottoposto in forma anonima alla valutazione di un referee.
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This contribution analyses the implications of the “composizione negoziata della crisi” – negotiated composition with creditors (“CNC”) from the perspective of private international law and international insolvency law, with particular attention to post-Brexit English law. The central thesis is that the CNC, in both its configurations, falls outside the scope of Regulation (EU) 2015/848 (EIR), and that this exclusion is the structural consequence of deliberate choices made by the Italian legislator, not a gap susceptible of correction through interpretation.
This contribution analyses the implications of the “composizione negoziata della crisi” – negotiated composition with creditors (“CNC”) from the perspective of private international law and international insolvency law, with particular attention to post-Brexit English law. The central thesis is that the CNC, in both its configurations, falls outside the scope of Regulation (EU) 2015/848 (EIR), and that this exclusion is the structural consequence of deliberate choices made by the Italian legislator, not a gap susceptible of correction through interpretation.
On that basis, this article develops an international insolvency law analysis grounded in three convergent lines of argument: the failure to include the CNC in Annex A of the Regulation; the absence of the public notice requirement as demanded by European uniform law; and the absence of the defining features of collective insolvency proceedings, namely dispossession, crystallisation of liabilities, opening of collective enforcement and structural judicial supervision. Even as regards the variant assisted by protective measures, whilst acknowledging the relevance of judicial intervention for the purpose of the judicial origin requirement, the analysis identifies the absence of a normative link of necessary preliminarity to a formal insolvency proceeding as a decisive obstacle to automatic cross-border recognition.
The article further examines the implications arising from post-Brexit English law, with particular reference to the rule in Gibbs, the limits of the Cross-Border Insolvency Regulations 2006 and the scope of the Part A1 Moratorium. The conclusions highlight a persistent systemic gap in the European framework, pointing to the need for a reforming intervention capable of ensuring cross-border effectiveness for confidential preventive restructuring instruments.
Riproduzione riservata
Sommario:
1.5 . Functional negotiability: viability of rescue, plurality of outcomes
1.6 . Systematic implications: the CNC at the crossroads of European private international law
2.1 . The regulatory framework: Art. 1, par. 1 of the Regulation and the two-tier triadic test
2.2 . The first ground of exclusion: Annex A and the failure of notification
2.3 . The second ground of exclusion: the structural deficiency of public notice
2.4 . The third ground of exclusion: the negotial and out-of-court qualification
2.5 . The five indices of non-collective character
2.6 . The conditional expansive thesis: CNC with protective measures and Art. 1(1)(c)
2.7 . The refutation of the expansive thesis
2.8 . Protective measures under Art. 18 CCII and their cross-border recognition
2.9 . The implications of exclusion: the applicable private international law regime
3 . The negotiated composition with creditors under the test of English law
3.1 . Preliminary remarks: the post-Brexit fracture and the problem of English-law-governed debts
3.2 . The Rule in Gibbs: origins, content and persistence in the post-Brexit legal order
3.3 . The CNC and protective measures before the Cross-Border Insolvency Regulations 2006
3.5 . The Part A1 Moratorium as a parallel procedure to protect the CNC
1 . The negotiated composition with creditors: legislative genesis, negotiated nature and out-of-court basis
In order to identify the principal characteristics of the negotiated composition with creditors ("CNC"), characteristics that have often been lost in the sea of doctrinal analyses on the subject, and to explain why this instrument cannot be regarded (whether directly, by analogy, or in conjunction with protective measures)as a "collective insolvency proceeding" within the meaning of Art. 2(4) of Regulation EU 2015/848[1] (“Regulation” or “EIR”) , and cannot fall within the extended application of the same pursuant to Recitals 7, 10 and 11, it is necessary to return to the systematic analysis of the Explanatory Report to Legislative Decree No. 118/2021 and to its own genesis in EU Directive 2019/1023 (“Restructuring Diretive”)[2].
1.1 . The historical and regulatory context: from the liquidatory paradigm to the European preventive shift
The CNC, introduced into the Italian legal system by Legislative Decree of 24 August 2021, No. 118[3] and subsequently transposed into the Code of Corporate Crisis and Insolvency ("CCII"), was born at a precise moment of transition in European and Italian insolvency law. To understand its nature, structure and private international law implications, it must be analyses within the historical and regulatory context from which it emerged: a context characterised by the progressive abandonment of the liquidatory-satisfactory paradigm that had inspired Italian insolvency law for decades, and by the affirmation of a preventive and enterprise-preserving logic that treats the business as an economic entity of objective and autonomous value.
The Italian insolvency system, built around the Royal Decree of 16 March 1942, No. 267, was traditionally conceived as a tool for ex post regulation of manifest insolvency: bankruptcy was the legal response to irreversible crisis, and the par condicio creditorum was its cardinal principle. This approach had revealed growing limitations in the face of contemporary economic reality, characterised by accelerated crisis cycles, high inter-company interdependence and widespread recognition of the social value of the enterprise as an aggregate of human resources, competencies and commercial relationships to be preserved even beyond the fate of the individual debtor. The Italian legislature had already attempted to address these needs through the 2005-2006 reforms and the 2017 delegating legislation[4], which had led to the adoption of the CCII. However, the OCRI early-warning system provided for in the original version of the Code had attracted severe criticism for its excessive bureaucratisation and inadequacy to the operational reality of Italian businesses. Legislative Decree No. 118/2021 abolished that system, replacing it with the CNC: an instrument of different cultural inspiration and regulatory structure.
The CNC belongs, more broadly, to a process of transformation of European insolvency law, driven by Anglo-Saxon influences of over four decades of elaboration,[5] whose decisive acceleration is represented by the Restructuring Directive. This process had already received an important initial impetus from EIR on cross-border insolvency proceedings, which, whilst operating on the level of private international law rather than substantive law, had introduced a broad and functional definition of “insolvency proceeding” capable of encompassing even pre-collective instruments. The Restructuring Directive then took the decisive step at the substantive law level, requiring Member States to adopt preventive restructuring frameworks accessible before insolvency becomes irreversible.
1.2 . Directive (EU) 2019/1023 as legislative matrix: selective transposition and systematic innovation
The Restructuring Directive constitutes the most ambitious reform of European insolvency law in the past two decades. In its opening recitals,[6] it sets out a cultural manifesto before a series of transposition obligations: the “business rescue culture” is presented as the new paradigm of European insolvency law, in which preventive restructuring is the physiological and primary tool for managing crisis, not the exceptional alternative to liquidation. The objective is to enable economically viable businesses to restructure at an early stage, before insolvency becomes irreversible, thereby preserving enterprise value in the interests of the entire community of stakeholders.
On a technical level, the Restructuring Directive constructs “preventive restructuring frameworks” around the threshold of “likelihood of insolvency”[7]: an entrepreneur who finds himself in financial difficulty such as to make his insolvency likely may access the preventive instruments provided by the Directive. These instruments allow for the suspension of enforcement actions, negotiation with creditors and adoption of a restructuring plan with binding effect even erga omnes with respect to classes of creditors that have not agreed to it, through the cross-class cram-down mechanism. The Restructuring Directive leaves Member States broad flexibility in shaping their own preventive instruments: in particular, Art. 4, par. 6[8] allows Member States to limit or exclude the involvement of judicial or administrative authorities in preventive restructuring frameworks — an option that the Italian legislature made extensive use of in constructing the CNC.
The Explanatory Report to Legislative Decree No. 118/2021 makes explicit the teleological link between the CNC and the Restructuring Directive, affirming the intention to “give complete and early implementation to Directive [...] 2019/1023 EU”[9]. The expression “early implementation” is noteworthy: the legislature did not await the ordinary transposition deadline of the Directive, but rather urgently introduced an instrument that, whilst inspired by the Directive's logic, constitutes an original and autonomous response to the specific needs of the Italian business fabric. The urgency, motivated by the need to manage the Covid-19 economic crisis, did not however condition the fundamental choices underlying the instrument[10].
1.3 . The legislative characterisation of the CNC: “an instrument of a negotiated and out-of-court nature”
At the heart of the legal characterisation of the CNC lies the formula contained in the Explanatory Report that has become the indispensable point of reference for every systematic reconstruction of the instrument: the CNC is “a new instrument to assist businesses in difficulty, of a negotiated and out-of-court nature”[11]. This is a triple characterisation that defines its identity and should guide the interpreter in resolving all the applicative problems arising from it, including the private international law questions that are the subject of this article.
The term “instrument” (and not “procedure”) is not accidental. It signals that the CNC is not conceived as a proceeding with a fixed structure and predetermined outcome, but rather as a flexible framework admitting a plurality of paths and solutions. Unlike collective insolvency proceedings in the technical sense, the CNC is an organised space for negotiation, devoid of any obligatory procedural structure, in which the parties negotiate freely with a view to an agreement that none of them is obliged to conclude or accept.
The adjective “negotiated” indicates that the CNC is founded on private autonomy and the consent of the parties: no solution should be imposed without the concurrent will of the debtor and the creditors who adhere to it. Creditors' participation in the negotiations is itself not mandatory but voluntary, subject to the obligations on creditors under Art. 4, par. 4 CCII and Art. 16, par. 6 CCII. The further qualifying characteristic, which the Explanatory Report itself expressly states as an element of distinction from collective insolvency proceedings, is the absence of any effect of opening collective creditor proceedings: “the application for appointment of the expert does not open collective creditor proceedings and does not result in any dispossession”[12]. The very opening of the CNC does not entail an automatic stay on individual enforcement actions by creditors, this being an optional and contingent phase available should the debtor company request the court to apply protective measures under Art. 18-19 CCII. These absences are structural, not accidental: they reflect the legislative choice to maintain the relationship between debtor and creditors on a private-contractual sphere for the entire duration of the negotiating process.
The adjective “extrajudicial” finally indicates that the proceeding takes place, primarily, outside the judicial circuit and before the expert appointed by the Chamber of Commerce. The court intervenes only at the request of the parties and for specifically delimited purposes: granting protective measures, authorising acts of extraordinary administration, and homologating any agreements reached. It does not preside over the proceeding, does not appoint or supervise the expert, and does not approve or reject proposed agreements. The absence of a structural and permanent judicial role is a constitutive feature of the institute: it reflects the legislature's deliberate choice to keep the CNC outside the perimeter of proceedings subject to formal public oversight, consistently with the option accorded to Member States by Art. 4, par. 6 of the Directive[13].
1.4 . Structural negotiability: managerial autonomy, voluntary participation and the role of the expert
The negotiated character of the CNC is not exhausted in its legislative characterisation: it permeates every structural element of the instrument and manifests itself with particular clarity in the analysis of the debtor's position, the role of the expert and the position of creditors during the negotiations.
As regards the debtor's position, the CNC fully preserves his managerial autonomy for the entire duration of the proceeding. Unlike collective insolvency proceedings in the technical sense, in which the debtor is subject to total or partial dispossession, external management control mechanisms and the obligation to seek judicial authorisation for the performance of extraordinary acts, in the CNC the debtor retains full governance of the enterprise[14]. There is no crystallisation of the liabilities, no formal opening of collective creditor proceedings, no dispossession, and the debtor may freely perform the acts of ordinary and extraordinary management that he considers useful for the rescue of the enterprise, subject only to the authorisations that the entrepreneur may request from the court under Art. 22 CCII (which remain optional and not mandatory) and the reports under Art. 21 CCII to the expert in respect of acts of extraordinary management and payments “inconsistent with the negotiations or the prospects of rescue”[15].
The central figure of the CNC is the expert, appointed by the Chamber of Commerce upon the application of the entrepreneur[16]. The expert's role is to “facilitate the negotiations”[17] between the parties: he is a facilitator of dialogue, not a crisis manager or an insolvency administrator. The expert has no managerial or supervisory powers over the entrepreneur's conduct; he cannot impose solutions, approve or reject proposals, or sanction the conduct of the parties save through notifications to the court. His function is that of a qualified mediator, endowed with instrumental credibility and technical expertise, who accompanies the parties through the negotiating process without substituting himself for them. This configuration of the expert's role is structurally distinct from that of an insolvency practitioner or that of the administrator of the insolvency procedure, who participates in managing the crisis with their own powers within a formalised framework of judicial supervision[18].
As regards the position of creditors, participation in the negotiations is voluntary within the perimeter traced by Arts. 4, par. 4 and 16, par. 6 (save where the creditor is a bank, a financial intermediary -or their agents or assignees of their claims for whom Art. 16, par. 5 would impose a duty to participate). No creditor is obliged to take part in the negotiations nor, a fortiori, to accept the entrepreneur's proposals. The protective measures granted by the court effect a temporary suspension of individual enforcement proceedings and precautionary actions[19], creating the conditions necessary for orderly conduct of the negotiations. However, such suspension does not modify the consensual structure of the proceeding nor does it override creditors' will as to the negotiated solutions to be adopted. Protective measures are, by their nature, temporary, revocable[20] and functionally subordinate to the needs of the negotiation: they are not an instrument of collective enforcement, nor a mechanism for the coercive modification of creditors' rights, nor are they designed to be preliminary to a collective insolvency proceeding, which remains only a contingent outcome of the CNC.
These elements have moreover been systematised into a list of structural indices excluding the collective character of the CNC:[21] (i) the full managerial autonomy of the debtor for the entire duration of the proceeding; (ii) the non-crystallising and unilateral nature of protective measures, which protect the debtor from creditors' actions; (iii) the absence of external management control mechanisms, save for reports to the expert; (iv) the absence of judicial authorisations for ordinary management acts; (v) the insufficiency of any “special effects” (such as preferential ranking of claims arising during the proceeding) to attribute an insolvency procedure character to the CNC, being accessory and instrumental effects supporting the negotiation, not constitutive of a proceeding in the technical sense.[22]
1.5 . Functional negotiability: viability of rescue, plurality of outcomes
The negotial character of the CNC is also reflected at the functional level, in the definition of the instrument's objectives and the outcomes it may produce. The logical fulcrum is the concept of “viability of rescue”:[23] a precondition for accessing the instrument is that “the rescue of the business is reasonably achievable”. Where rescue is unattainable, the CNC should not (and does not) open, and the entrepreneur should resort to the main collective insolvency procedures.[24] This structure confirms that the CNC is not to be regarded as an instrument for regulating insolvency -as the main collective proceedings do- but rather as an instrument for preventing it through a consensual rescue process.[25]
The plurality of outcomes provided for by the legislation[26] further confirms the nature of the CNC as a “container-instrument”: it is not a proceeding with a predetermined outcome, but rather a facilitated path of consensual resolution of the crisis that may lead to a wide range of negotiated solutions under Art. 23, par. 1,[27] or more formal and structurally complex ones under Art. 23, par. 2,[28] the latter being regarded as full insolvency procedures and being the last resort.
All the typical outcomes of the CNC are contractual or para-contractual in nature: they are agreements that presuppose the consent of the parties and produce effects only between them (save for recourse to formal procedures such as a homologated rescue plan). The law facilitates these outcomes by according them certain special effects, but does not alter their negotial nature nor confer binding force on non-adhering creditors save through formal insolvency procedures accessory to the CNC.
1.6 . Systematic implications: the CNC at the crossroads of European private international law
The characteristics described above converge in depicting the CNC as an instrument that the Italian legislature has deliberately placed outside the perimeter of insolvency proceedings in the technical sense. This collocation, as this article has sought to demonstrate, is not the product of terminological imprecision or a legislative gap, but of a coherent legislative policy choice consistent with the logic of a “change of pace” and a “change of culture”.[29]
This choice has consequences of primary importance for European international private law, as will be seen in the next section. The EIR governs only those proceedings that satisfy the cumulative requirements of its Art. 1, par. 1 EIR and are listed in Annex A. The CNC has not been included in Annex A for Italy either at the time of its creation or, more recently, with the latest update of Annex A by Regulation (EU) 2025/2073 in October 2025: this formal datum, taken together with the substantive considerations set out in the preceding paragraphs, immediately raises the question of the qualification of the CNC for EIR purposes and, more generally, of the cross-border effectiveness of the measures and agreements concluded in the context of the instrument. The following sections will proceed to a systematic analysis of these questions, beginning with an examination of the requirements of Art. 1, par. 1 EIR and a verification of whether they are -or are not- satisfied by the CNC in both its ordinary configuration and in the variant with protective measures.
2.1 . The regulatory framework: Art. 1, par. 1 of the Regulation and the two-tier triadic test
The question of the applicability of EIR to the CNC constitutes the central theoretical issue of this contribution. The answer is not merely academic, given the implications of whether or not the Regulation’s safeguards apply. The thesis advanced here is that the CNC -whether in its “ordinary” form (without protective measures) or in its “assisted” form (with protective measures)- does not constitute “insolvency proceedings” within the meaning of the Regulation and that, accordingly, the Regulation's framework is not applicable to it.
Art. 1, par. 1 of the Regulation delimits its scope of application ratione materiae through a selective two-tier mechanism, the correct understanding of which is an indispensable prerequisite for the qualification of the CNC.[30]
At the first tier, cumulative threshold conditions operate: the proceeding must be (i) collective, in the sense that it must concern “all or a significant part of a debtor's creditors” (the collectivity requirement, made explicit by Art. 2, par. 1); (ii) public, in that its opening must be apparent from a publicly accessible register, in the sense of Recitals 12 and 13; (iii) governed by rules relating to insolvency, as defined by Recital 16, with the express exclusion of “general contract and company law”.[31] These conditions operate cumulatively[32]: the failure to satisfy even one of them excludes the proceeding from the scope of the Regulation.
However, in order to remain flexibly applicable to legal innovations, the Regulation provides, at the second tier, that a proceeding falling within its scope must also display at least one of the characteristics set out in Art. 1, par. 1 lett (a), (b) or (c). Letter (a) requires that “a debtor is totally or partially divested of its assets and an insolvency practitioner is appointed”; letter (b) that “the assets and affairs of a debtor are subject to control or supervision by a court”; and letter (c) -upon which the debate concerning the CNC is primarily focused- prescribes that “a temporary stay of individual enforcement actions is granted by a court or by operation of law, in order to allow for negotiations between a debtor and its creditors, provided that the proceedings for which the stay is granted include appropriate measures to protect the general body of creditors and, where no agreement is reached, are preliminary to one of the proceedings referred to in point (a) or (b)”.[33]
The three alternatives in letters (a), (b) and (c) are mutually exclusive at the second tier: it is sufficient for the proceeding to satisfy even only one of them. However, this alternativity operates solely inter se and does not eliminate the need for the first-tier threshold conditions to be previously and cumulatively satisfied. The Court of Justice has elaborated in this context a hierarchical and functional approach: the absence of even one first-tier threshold condition renders analysis of the functional tier unnecessary, since the proceeding is already excluded upstream from the scope of the Regulation. This leads to a distinction that is crucial for the qualification of the CNC: the ordinary configuration of the instrument, without protective measures, is excluded from the EIR already at the first tier, for failure of the collectivity and public nature requirements, without any need to analyse letters (a)-(c). The requisite to be “preliminary to an insolvency procedure” in letter (c), by contrast, acquires relevance exclusively in the variant assisted by protective measures granted by the court and registered in the Registrar of Companies, since it is only in that variant that the threshold conditions can, at least in the abstract, be regarded as capable of satisfaction. As will be shown, even in this variant the preliminarity requirement is not met, so that exclusion from the EIR operates, for partially different reasons, in respect of both configurations of the CNC.
2.2 . The first ground of exclusion: Annex A and the failure of notification
The first argument in favour of the exclusion of the CNC is formal in character but none the less compelling as this is a clear legislative policy decision on the part of the Italian legislature. The CNC does not appear in the list in Annex A of the Regulation, as last amended by Regulation (EU) 2025/2073[34] (which introduced into Annex A one of the most common outcomes of the CNC — itself a collective insolvency proceeding, the simplified liquidation plan following negotiated composition.
Annex A is exhaustive in nature: no national proceeding may aspire to automatic recognition under the Regulation unless it is listed therein, according to the settled interpretation of the Court of Justice.[35] The mechanism for amending Annex A, activated by a specific notification from the Member State to the Commission, constitutes the ordinary and necessary channel through which a new national proceeding enters the orbit of the Regulation. Italy notified the Commission of the entry into force of the CCII without including the CNC in the list of proceedings to be inserted in Annex A, and instead requested and obtained the inclusion of one of the most common outcomes of the CNC (the simplified liquidation plan), thereby making the legislature's intent clear not to subject the CNC to the EIR regime.[36]
In legal scholarship, attempts have been made to neutralise this argument by observing that the failure to include the CNC in Annex A may be due to contingent temporal reasons and that the Annex is “always susceptible of revision whenever it is necessary to include new national procedures”.[37] This objection, whilst formally correct, is inexorably rebutted by the specific decision of the Italian legislature and Government not to proceed with the notification necessary for its inclusion in the latest update of Annex A.[38] Until the CNC is included in Annex A, the Regulation cannot apply to the CNC under its main automatic recognition regime. The fundamental question remains whether the CNC satisfies the substantive requirements of Art. 1, par. 1: and the answer to that question, as will be shown, is negative.
2.3 . The second ground of exclusion: the structural deficiency of public notice
The Regulation associates the concept of “public proceeding” with the possibility for creditors to “be informed of the proceeding, to lodge their claims” and to “challenge the jurisdiction of the court which has opened the proceeding” (Recital 12). Public notice is contrasted with confidentiality, understood as a “characteristic of a proceeding the opening of which would be unknown to a creditor or court situated in another Member State”, making it “difficult to predict the recognition thereof throughout the Union” (Recital 13).
Now, the CNC is structurally characterised by the confidentiality of the negotiations: this is not an incidental but a constitutive feature of the instrument, expressly valued by the legislature as a condition for the effectiveness of the negotiating process. The contents of the negotiations, the proposals made, the partial agreements reached, are all confidential. Creditors who do not participate in the negotiations have no access to the relevant information. The mere registration of the application for appointment of the expert in the Registrar of Companies, which relates to the opening of the process, not to its content, does not fully satisfy the level of public notice required by the Regulation, which presupposes the knowability of the proceeding, its effects and the jurisdictional competence by creditors and courts of other Member States.[39]
As the same scholarly strand that supports the applicability of the Regulation to the CNC has acknowledged, the negotiated composition “lacks of itself the judicial character” and is “devoid of a public nature in the sense accepted by the Regulation”.[40] Recital 13 expressly excludes proceedings of a “confidential character”: an expression that fits the CNC perfectly. Even the variant assisted by protective measures does not overcome this structural deficiency: the public notice of the application for protective measures in the Registrar of Companies (Art. 18, par 1 CCII) concerns only the grant of those measures, not the overall framework of negotiations. The publicity of a single procedural act is not equivalent to public notice of the proceeding as a whole.
It has further been argued that the registration of the expert's appointment and, in the variant with protective measures, of the related application and court order, in the Registrar of Companies (Arts. 17, par 3 and 18, par. 1 CCII) satisfies the publicity requirement of the Regulation, rendering the CNC knowable by creditors in other Member States.[41] This argument is not convincing for structural reasons. The publicity requirement of the Regulation is not exhausted by the mere existence of a domestic registration: it requires, according to Recitals 12 and 13, effective cross-border knowability, enabling foreign creditors to become aware of the proceeding, to lodge their claims and to challenge the jurisdiction of the court that ordered its opening. The appointment of the expert is not a “decision opening the proceeding” within the meaning of Art. 2, par. 7 EIR: it does not produce erga omnes effects, does not establish any COMI as exclusive forum under Art. 3 EIR, and does not open any collective creditor proceedings. A foreign creditor reading the entry in the Italian Registrar of Companies would be unable to derive from it either the nature of the proceeding in progress (nor could they immediately conclude that it constitutes a collective insolvency proceeding, given the absence from Annex A), or their own rights within it. Indeed, their rights would be impaired[42] where the contract is not subject to Italian law and jurisdiction, but to a foreign law and jurisdiction (whether intra-EU or extra-EU). This observation is confirmed by comparison with the public variant of the Wet Homologatie Onderhands Akkoord (“WHOA”), which, in order to receive the Regulation's automatic recognition, requires registration in three separate public registers plus the holding of public hearings: if a single entry in a domestic register were sufficient, such a multi-register architecture would be entirely superfluous. The publicity of the CNC is, functionally, a notice of domestic significance; it does not cross the threshold of cross-border knowability that the Regulation requires as a condition of its scope of application.
The most instructive comparative precedent on the subject of publicity is offered by the Dutch insolvency legislation, which explicitly confronted the problem of the compatibility between confidentiality and the Regulation's regime in the design of the WHOA, the Dutch restructuring procedure that entered into force on 1 January 2021. The Dutch legislature deliberately articulated the WHOA in two structurally distinct variants: a “public” variant (openbare procedure), in which the opening of the proceeding is registered in the central insolvency register, in the Staatscourant and in the companies register, and the hearings are open to the public; and a “confidential” variant (besloten/onderhands), in which the proceeding is not announced, is not entered in any accessible register and the hearings are held in chambers. Only the public variant was included in Annex A of the Regulation, with effect from 9 January 2022, acquiring the benefit of automatic recognition in all Member States. The confidential variant was deliberately excluded from Annex A and, accordingly, from the entire scope of application of the Regulation.[43]
The normative basis for this exclusion is explicitly identified in Recital 13 of the Regulation, which states that “confidential insolvency proceedings should be excluded from the scope of this Regulation, since their confidential nature makes it impossible for a creditor or a court situated in another Member State to know that such proceedings have been opened”. The Dutch legislature made a deliberate policy choice: in order to preserve the attractiveness and flexibility of the confidential variant of the WHOA, it accepted that such variant could not benefit from the automatic recognition of the Regulation. The same bifurcated structure is found in other national legal orders that have transposed Directive (EU) 2019/1023: in Germany, only the public variant of the StaRUG (Unternehmensstabilisierungs- und -restrukturierungsgesetz) is included in Annex A, whilst the private variant remains excluded; in France, the mandataire ad hoc and conciliation procedures, confidential by statutory definition, have never appeared in Annex A. The pattern repeats itself in Luxembourg, Hungary and the Czech Republic: in all these legal orders, the confidential variants of preventive instruments are placed outside the perimeter of the Regulation.[44]
For the CNC, the comparative argument operates a fortiori. The Italian legislature, in designing the CNC, made no bifurcation analogous to the Dutch legislature. The CNC is structurally and entirely conceived as a confidential instrument, without any “public variant” designed for inclusion in Annex A. The absence of the CNC from Annex A is therefore not the product of an oversight or a delay in updating the list, an argument sometimes invoked in support of the expansive thesis, but rather a clear legislative policy decision aimed at safeguarding the confidentiality of negotiations within the CNC. If the Dutch legislature, with an instrument specifically designed in the light of the Directive and endowed with a public variant fully compatible with the Regulation, nonetheless chose to exclude the confidential variant from Annex A, there is no systematic argument for reaching a different conclusion in respect of the Italian CNC, which, unlike the WHOA, does not even have a public variant attesting to any aspiration to Regulation coverage.[45]
2.4 . The third ground of exclusion: the negotial and out-of-court qualification
The non-collective nature of the CNC is not an interpretive construction of the private international law scholarship: it emerges, with literal clarity, from the Explanatory Report to Legislative Decree No. 118/2021. The Report defines the CNC unequivocally as “a new instrument to assist businesses in difficulty, of a negotial and out-of-court nature”.[46] This qualifiaction has been fully accepted by Italian corporate and insolvency law scholarship, which has recognised that the negotiated composition does not open collective creditor proceedings, does not result in any dispossession and is not “in principle, a collective insolvency proceeding in the technical sense”.[47]
In this perspective, the CNC is situated temporally and functionally prior to the threshold of manifest insolvency, in the “twilight zone” between the likelihood of insolvency and full insolvency. It represents an “earliest warning” instrument (an expression favoured by the Restructuring Directive) that intervenes at a stage even earlier than that which the Directive itself contemplates for preventive restructuring frameworks.[48] The negotiated process has characteristics akin to those of the out-of-court workouts studied by international comparative scholarship, which are uncontroversially placed outside the scope of the EIR.[49] International private insolvency law operates from a structural distinction between the “contractual domain”, in which consensual and confidential instruments operate, and the “collective domain”, in which formal proceedings subject to judicial supervision operate. The CNC belongs entirely to the former domain.[50]
2.5 . The five indices of non-collective character
As seen in the first section, the characterisation of the CNC as a non-collective instrument finds fundamental support in a systematic analysis of its structural features. Legal scholarship has identified five revealing indices of this non-collective nature, whose normative significance derives not from mere definitional choices by the legislature, but from the functional essence of the instrument.[51]
The first index is the entrepreneur's full managerial autonomy. In the course of the CNC, the debtor retains full ordinary and extraordinary management of the enterprise and its assets (Art. 16, par. 4 CCII). Unlike collective insolvency proceedings, where dispossession, even partial, redistributes management powers among the entrepreneur, the organs of the procedure and the judicial authority, in the CNC the debtor remains formally and substantively the dominus of the enterprise. No extraordinary management act requires judicial authorisation, with the exception of the specific cases in Arts. 22-23 CCII, limited to acts instrumental to the negotiations and not replacing managerial autonomy, and the expert's power to make a notification to the entrepreneur or the company's management organ only where “the act may cause prejudice to creditors, to the negotiations or to the prospects of rescue”.[52] No rule prevents the entrepreneur from making preferential payments to pre-application creditors, after notifying the expert, under Art. 21, par. 3 CCII.[53]
The second index is the absence of crystallisation of liabilities and the “unilateral” and “unidirectional” nature of protective measures. When granted, the protective measures produce effects exclusively in the sense of protecting the debtor from creditors' enforcement and precautionary actions: they produce no effect of crystallising claims at the application date, no effect on the assets of the debtor, establish no par condicio regime and do not prevent the entrepreneur from paying pre-application creditors selectively. This structural asymmetry (the measures operate against creditors but not in favour of the body of creditors as a collectivity) radically distinguishes them from the measures characteristic of collective insolvency proceedings,[54] with a clear distinction therefore from the measures referred to in Art. 54 CCII.
The third index is the absence of external control mechanisms of a systematic character. The expert appointed by the Chamber of Commerce does not exercise supervisory or control powers in the sense relevant to Art. 1, par. 1, lett. (b) of the Regulation. He “facilitates negotiations” (Art. 12, par. 1 CCII) between the parties without coercively replacing or supplementing the debtor. The expert has no autonomous sanctioning powers: his only indirect coercive instrument is the negative final report that brings the process to an end, with the consequent loss of legal protections.[55] There are certainly no coercive measures against creditors (whether or not they participate in the negotiations). Recital 10 of the Regulation, in defining “supervision” relevant for letter (b), includes “situations where the court intervenes only upon application by a creditor or other interested parties”: even this reductive formula is more intensive than the role as mere facilitator, akin to that of a mediator, played by the expert.
The fourth index is the absence of external authorisations for management acts outside the specific and limited cases in Arts. 22-23 CCII, as noted above. The judicial authorisations provided for by those articles concern exclusively acts instrumental to business continuity and to the best satisfaction of creditors in the context of negotiations: they are not “systemic” authorisations that shape the entire management of the enterprise, but specific derogations that confirm the general rule of entrepreneurial autonomy.[56]
The fifth index, perhaps the most significant at the level of functional analysis, concerns the role of the “special effects” of the CNC: exemption from avoidance actions (Art. 166, par. 3 CCII), preferential ranking of claims arising during the negotiations, immunity from criminal sanctions. The argument -sometimes advanced in legal scholarship- that the presence of such “special effects” would be sufficient to attribute to the CNC a “para-collective” nature relevant for Regulation purposes must be rejected. The “special effects” are functional consequences of a legislative choice aimed at incentivising early recourse to crisis resolution instruments: they operate ex post, upon the occurrence of specified conditions, and do not modify the legal structure of the negotiated process whilst it is under way. The inverse reasoning, from the presence of effects to the qualification of the cause, is a classic example of post hoc ergo propter hoc applied to legal doctrine.[57]
2.6 . The conditional expansive thesis: CNC with protective measures and Art. 1(1)(c)
The legal scholarship that has addressed the international private law dimension of the CNC with greatest rigour has proposed a more nuanced thesis than that of outright total exclusion: the CNC is not in itself referable to the Regulation, but becomes so when accompanied by the grant of protective measures under Arts. 18-19 CCII.[58] The distinction between the “ordinary” CNC (without protective measures) and the “assisted” CNC (with protective measures) is therefore the fundamental dividing line proposed by this view.
Legal scholarship has further developed this position, arguing that the CNC assisted by protective measures would satisfy all requirements under Art. 1 of the Regulation:[59] (i) it is “collective” in the sense that it concerns all creditors of the entrepreneur (or a significant part of them); (ii) it is governed by the CCII, Italian legislation on insolvency; (iii) it has the purpose of rescue, debt restructuring and reorganisation; (iv) it is subject to “the control or supervision of a court” that may grant, modify or revoke the measures (Arts. 18-19 CCII) and authorise certain acts (Art. 22 CCII); (v) it is “public” insofar as the application for protective measures is published in the Registrar of Companies; (vi) it may entail the suspension of individual enforcement actions and may be “preliminary” to the formal insolvency proceedings listed in Annex A.
In support of this thesis, Recitals 7, 10, 11 and 15 of the Regulation are invoked.[60] Recital 7 emphasises the desirability that such proceedings be governed by the Regulation with an interpretation that “bridges, as far as possible, the regulatory gaps between the two instruments” (EIR and Brussels I). Recital 10 declares that “it is appropriate to extend the scope of this Regulation to proceedings that promote the rescue of economically viable debtors” at the stage of a mere likelihood of insolvency. Recital 11 provides that the Regulation “should also apply to proceedings providing for a temporary stay of individual enforcement actions by individual creditors”, provided “they are preliminary to other proceedings covered by this Regulation”. Recital 15 includes proceedings opened “for a certain period of time on a provisional or temporary basis”.
The critical point identified by the expansive scholarship itself concerns precisely the preliminarity requirement: the circumstance that the link between the suspension of individual actions and the proceedings covered by the Regulation is contingent appears to hinder the application of the Regulation.[61] The response elaborated by the expansive scholarship to this difficulty is that making the application of the Regulation dependent on the actual outcome of the negotiations would undermine the principle of legal certainty.[62]
2.7 . The refutation of the expansive thesis
The expansive thesis[63], however doctrinally authoritative and systematically elaborated, is not persuasive and does not withstand the critical scrutiny conducted in the preceding sections.
As regards the preliminarity requirement in Art. 1, par. 1, lett. (c) EIR, as demonstrated at § 2.1 and § 2.6, the link between the suspension of enforcement actions and the opening of a proceeding under letter (a) or (b) is in the CNC ontologically contingent: the negotiated composition may conclude, and in the majority of cases does conclude, with negotiated outcomes entirely independent of the opening of a formal proceeding. The systematic framework of Art. 23, par. 1 CCII, already examined at § 1.5 of this article, sets out a graduated scale of positive outcomes of the negotiations in which a collective insolvency proceeding is the last resort and not the instrumental purpose of the instrument.[64] That the expansive scholarship itself has acknowledged that this link “appears to hinder the application of the Regulation” is telling: the response it proposes (legal certainty as the foundation for an extensive interpretation) does not overcome the textual constraint of Recital 11, which demands preliminarity as a structural feature of the suspension proceeding and not as a mere statistical contingency.[65]
As regards the publicity requirement, the demonstration was conducted in full at § 2.3: the CNC is structurally confidential, the appointment of the expert does not constitute a “ecision opening the proceedings” within the meaning of Art. 2, par. 7 EIR, and registration in the Registrar of Companies does not satisfy the threshold of cross-border knowability required by Recitals 12 and 13.[66] The comparison with the public variant of the WHOA, which in order to obtain automatic recognition requires registration in three public registers and public hearings, has confirmed in comparative terms that a single entry in a domestic register is structurally inadequate: the Dutch legislature consciously excluded the confidential variant from Annex A precisely to preserve its confidentiality, and the same pattern is found in Germany, France and in the other legal orders that have transposed the Restructuring Directive.
As regards the requirement of adequate protection of the general body of creditors imposed by letter (c), the protective measures of the CNC prove structurally inadequate for the reasons already set out at § 2.5: they operate “laterally” and “unidirectionally”, protecting the debtor from enforcement actions without establishing any par condicio regime, without crystallising liabilities at the application date, without preventing potentially preferential payments to individual creditors, and without divesting the entrepreneur of his assets. This structural asymmetry excludes satisfaction of the condition of adequate collective protection that letter (c) requires as a distinct and additional requirement beyond the mere grant of the suspension.[67]
The fifth argument, perhaps the most revealing at the doctrinal level, emerges from the very scholarship that supports the applicability of the Regulation to the CNC. As anticipated in a note at § 2.3, the author[68] who has most authoritatively articulated the expansive thesis has acknowledged, in a recent contribution, that preventive restructuring frameworks lacking “public nature as the EIR requires” “fall outside” the EIR, and has proposed the creation of a new European restructuring instrument / certification, the ECR (European Corporate Rescue), precisely to fill the cross-border recognition gap that afflicts these instruments akin to the CNC.
This proposal contains an implicit but logically necessary concession: if existing law already covered the CNC and analogous instruments, as the expansive thesis maintains, there would be no gap to fill and no need to create a new European instrument. The reform proposal is therefore an acknowledgement that the gap exists in positive law: the current Regulation does not cover preventive restructuring instruments that are confidential and out-of-court unless they are necessarily included in Annex A, and the appropriate response to this gap is European legislative reform, not an evolutive interpretation of Art. 1(1) beyond its textual premises.[69]
The convergence of these five lines of reasoning allows the conclusion that the CNC, in both its configurations, does not fall within the scope of EIR. The exclusion is not the product of a restrictive or formalistic interpretation, but the necessary and structural consequence of an instrument that the Italian legislature has consciously modelled as a negotiated, out-of-court and confidential instrument, foreign by its very nature to the perimeter of European uniform insolvency law.
2.8 . Protective measures under Art. 18 CCII and their cross-border recognition
The CNC in its ordinary configuration, without protective measures, is structurally excluded from the EIR for the reasons set out at §§ 2.1-2.6. The case where protective measures are requested will now be analysed.
The requirements of judicial origin and adequate protection are both satisfied by the order under Art. 19 CCII, and their verification must be conducted jointly, since the procedural safeguards are simultaneously an expression of judicial origin and the foundation of adequate protection. As regards judicial origin, the order is issued by the court and not by an administrative body or as the automatic consequence of a party act, and is issued at the conclusion of a fully judicial proceeding distinct from the mere administrative registration of the opening of the CNC: the court schedules the hearing within ten days and issues a reasoned order.[70] At the hearing, full inter partes proceedings take place: the court hears the parties, obtains the expert's opinion on the functionality of the measures and, where the order affects the rights of third parties, summons and hears them; the order is reasoned, determines the duration of the measures (30-120 days, extendable to 240) and is subject to review by way of objection under Art. 669 terdecies of the Code of Civil Procedure. The possibility of revocation on the application of any interested creditor (Art. 19, par. 6 CCII) completes the framework of adequate protection, ensuring an accessible subsequent remedy for all. The combination of full inter partes proceedings before the order and a subsequent revocatory remedy structurally distinguishes the proceeding under Art. 19 CCII from the preceding confidential phase and satisfies the functional content that Recital 11 EIR attributes to the requirement of “adequate protection of creditors” in the context of proceedings under Art. 1, par. 1, lett. (c) EIR.[71]
There remains, however, an internal difficulty regarding the second requirement that acquires independent relevance at a cross-border level. Art. 19, par. 4, last sentence, CCII allows the court to limit the measures to specific creditors or categories: where this power is exercised against a creditor established in another Member State, the question arises of the extraterritorial effectiveness of the order and, before that, of the applicable circulation regime.
If the requirements of Art. 1, par. 1, lett. (c) are on the whole satisfied, the EIR mandates automatic recognition of the decision opening the proceedings and of the effects produced by it, including the stay of individual actions, or whatever the judge ordered at the time of issue, in all Member States (Art. 19 EIR), without the need for exequatur: the fact that the measure is directed at a single foreign creditor would not affect the circulation regime, and the stay would be binding in the creditor's Member State by virtue of recognition of the Italian proceeding alone. Conversely, the very potential selectivity of protective measures that enables them to reach foreign creditors undermines the structural premise of the EIR: as clarified by the Court of Justice in O'Sullivan McCarthy, the collectivity requirement demands uniform effects on the general body of creditors or on a significant part of them.[72] A measure directed nominally at a single creditor does not satisfy this standard and risks being placed in a no man's land between the two European regimes: too closely connected to insolvency to circulate as a civil and commercial decision under the Brussels I-bis (from which insolvency proceedings are expressly excluded under Art. 1, par. 2, lett. (b)), but too devoid of collective character to benefit from automatic EIR recognition. In this scenario, the foreign creditor could effectively evade the stay by acting before his own national court, without the Italian debtor having any directly enforceable European instrument. The problem becomes even more acute where the addressee of the measure is established in the United Kingdom because of Brexit. Recognition in England of foreign insolvency proceedings is not automatic but discretionary: the High Court may grant recognition as “foreign main proceedings” and grant a stay under Art. 21 of Schedule 1, but retains wide discretion. The qualification of the CNC as “foreign proceedings”, as will be seen in the final section, remains contested in the light of the episodic and limited nature of judicial supervision in the CNC.[73] The court's selective power under Art. 19, par. 4 CCII would thus produce a paradoxical effect from an international private law standpoint: it would increase the domestic flexibility of the protective measure but would weaken its cross-boder circulation, precisely in those cases, a foreign non-compliant creditor, where extraterritorial effectiveness would be most needed.
The decisive obstacle to the intra-European circulation of protective measures remains the requirement of structural preliminarity: the suspension must be granted within a proceeding that, in the event of failure to reach an agreement, is “preliminary to” one of the proceedings in letters (a) or (b). As scholarship has noted, “the circumstance that the link between the suspension of individual actions and proceedings covered by the Regulation is contingent appears to hinder the application of the Regulation”:[74] Recital 11 demands preliminarity as a structural feature,[75] not as a mere statistical contingency. This deficiency is not remedied by the proceeding under Art. 19 CCII: the quality of the suspension (judicial, in contradiction, with creditor safeguards) is compatible with letter (c); what is lacking is the normative link between the suspension and formal insolvency proceedings. Art. 23, par. 1 CCII enumerates a plurality of positive outcomes of the CNC none of which necessarily requires the opening of an Annex A proceeding,[76] and the link would not appear normatively guaranteed under Italian law.
In conclusion, the order confirming protective measures under Art. 19 CCII appears to satisfy the requirements of judicial origin and adequate public notice required by Art. 1, par. 1, lett (c) EIR, and may satisfy that of adequate protection of creditors; the collectivity requirement is satisfied only if the order is of general scope, not limited to specific creditors under Art. 19, par. 4 CCII, with the consequences for extraterritorial circulation described above. In any event, the requirement of structural preliminarity would remain unsatisfied: the absence of a normative link with formal insolvency proceedings would preclude their subsumption under EIR protection, with all the connected benefits such as automatic recognition throughout European territory. On the Brussels I-bis side, the functional test in Gourdain and Nickel & Goeldner brings the order under Art. 19 CCII within the insolvency-related category, excluding it from the scope of that Regulation; and the collective character of the general order is structurally incompatible with the bilateral logic of Brussels I-bis.
2.9 . The implications of exclusion: the applicable private international law regime
The exclusion of the CNC from the scope of the Regulation does not imply that it has no relevance in private international law: it implies, more simply, that the problems of cross-border recognition of its effects must be resolved through the ordinary instruments of private international law, not through the automatic recognition mechanism specific to the EIR.
In the absence of the Regulation, the law applicable to contracts concluded in the course of the negotiated composition negotiations will be determined by Regulation (EC) No. 593/2008 ('Rome I'), which allows parties freely to choose the law applicable to the contract (Art. 3 Rome I).[77] The contract so concluded will circulate abroad as a negotial instrument, without benefiting from the automatic recognition of insolvency decisions.[78] Remedies for breach will be exclusively contractual in nature. This will directly affect the possibility of giving effect to such agreements against creditors who did not participate in the negotiations, or who opposed both the negotiations and their outcome. The position is different where the CNC results in a certified rescue plan, in the homologation of a debt restructuring agreement, in an application for concordato preventivo, or in access to any other crisis resolution instruments governed by the CCII or the rules on extraordinary administration. However, in that case, it is not the CNC that benefits from the advantages of the EIR, but its contingent outcome in an insolvency proceeding.
The exemption from avoidance actions (Art. 166, par. 3 CCII) operates as a domestic substantive law provision: its cross-border relevance will depend on the law applicable to any collective insolvency proceeding that may subsequently be opened. If such a proceeding is subject to the Regulation (for example, concordato preventivo or judicial liquidation), Art. 16 EIR may apply to protect the counterparties of the CNC against avoidance actions under the lex concursus.[79] If the proceeding is opened in a non-EU country, such as post-Brexit United Kingdom, the cross-border relevance of the CNC's effects will depend on the international private law of the State of opening, with the difficulties that will be examined in the following section.
In conclusion, the negotiate composition with creditors is an instrument of contractual insolvency law, not a collective insolvency proceeding itself. The legislature has consciously chosen to structure it as a negotiated and out-of-court process, valuing the confidentiality and voluntariness of dialogue between entrepreneur, creditors and expert. This choice has direct consequences in the field of international private law: the CNC does not benefit from the EIR umbrella, and its cross-border implications must be governed through the ordinary instruments of contract law and general international private law. This conclusion, far from being a defect of the regulatory framework, constitutes a structural feature consistent with the early and consensual purpose of the instrument: an instrument that intervenes before insolvency law becomes fully applicable cannot, for that reason alone, be subjected to the categories and procedures of international insolvency law.[80]
3.1 . Preliminary remarks: the post-Brexit fracture and the problem of English-law-governed debts
The United Kingdom's departure from the European Union has produced, in the field of private international insolvency law, a systemic fracture of great practical significance: from 1 January 2021 the EIR ceased to apply to relations between Member States of the European Union, including Italy, and the United Kingdom, depriving Italian proceedings of any channel of automatic recognition across the Channel (and vice versa[81]). For Italian businesses in crisis that have incurred debts governed by English law, a circumstance far from rare in the context of lending syndicates, international bond issuances and derivative contracts, this void translates into a concrete and urgent problem: neither the CNC nor the protective measures generated by it can produce legally binding effects against creditors in England, for the reasons set out in this section.
3.2 . The Rule in Gibbs: origins, content and persistence in the post-Brexit legal order
The so-called Rule in Gibbs takes its name from the decision in Antony Gibbs & Sons v La Société Industrielle et Commerciale des Métaux of 1890,[82] in which the English Court of Appeal held that an obligation governed by English law cannot be extinguished by a foreign insolvency proceeding unless the creditor has freely consented to be bound by such proceeding. The principle is today codified in Dicey, Morris & Collins on the Conflict of Laws as a rule of British private international law prescribing that “a discharge from any debt or liability under the bankruptcy law of a foreign country outside the United Kingdom is a discharge from that debt or liability if, and only if, it is a discharge under the law applicable to the contract”.[83] The rule expresses, in substance, a coincidence between the lex contractus and the law governing the extinction of the obligation: if the parties have chosen English law as the governing law of their contract, only English law can determine the manner and grounds for extinguishing the debt arising from it.
The vitality of the Rule in Gibbs in contemporary times has been confirmed in two highly significant decisions. In Bakhshiyeva v Sberbank of Russia, the High Court and subsequently the Court of Appeal refused to extend a stay on English-law-governed debts beyond the duration of the Azerbaijani restructuring proceeding, holding that to do so would have amounted to extinguishing the debt before a foreign court in violation of the rule.[84] Similarly, in OJSC International Bank of Azerbaijan, the Court of Appeal restated the rule in the face of a foreign restructuring plan that purported to bind holders of English-law-governed bonds.[85] In both cases, the English courts did not call into question the legitimacy of the foreign proceedings, but rather their extraterritorial effect on obligations contractually subject to English law.
The Rule in Gibbs has provoked vigorous academic debate, which continues without either camp having prevailed, articulated along the universalism-territorialism axis but not confined to it. Louis Noirault, in a recent contribution published in the Harvard Business Law Review Columns,[86] argues that the rule has been erroneously assimilated to territorialism: its logic is instead contractualist, founded on respect for the autonomy of parties who have chosen English law as their lex contractus. Sarah Paterson (London School of Economics), in a paper that develops this perspective, offers a “qualified defence” of the rule:[87] in the context of restructurings, unlike terminal insolvency proceedings, where the objective is not the coercive distribution of assets but the renegotiation of obligations, the governing law of the contract constitutes the legitimate point of reference for any distress renegotiation, reflecting the same logic as Art. 12, par. 1, lett. (d) of the Rome I Regulation, which subjects “the various ways of extinguishing obligations” to the law applicable to the contract.[88]
The Financial Markets Law Committee confirmed, in a report published in February 2024,[89] that the Rule in Gibbs continues to serve an essential function of guaranteeing legal predictability in international financial markets, discouraging the instrumental use of foreign proceedings to discharge sterling-denominated obligations without creditor consent. The persistence of the rule also reflects the limited appetite of English courts to abandon it judicially, with the consequence that any reform requires an Act of Parliament.[90] An attempt to supersede the rule was made through the consultation launched by the British Government[91] on the adoption of the so-called Article X of the UNCITRAL Model Law on Insolvency, which concluded in July 2023 with a recommendation to adopt the Model Law on Recognition and Enforcement of Insolvency-Related Judgments. However, the process appears to have stalled.
For the Italian entrepreneur in the CNC who has English-law-governed debts, the practical consequences are immediately evident. Any agreement reached in the CNC does not bind, in England, creditors who have not consented to it. The protective measures produce no inhibitory effect on individual enforcement actions by English creditors where the entrepreneur or company has assets in England. Even a concordato preventivo homologated by the Italian court (which, unlike the CNC, constitutes a formal proceeding) cannot discharge English-law obligations save upon obtaining recognition under the Cross-Border Insolvency Regulations 2006 in the United Kingdom. The Re Cimolai SpA case[92] vividly illustrates this situation.
3.3 . The CNC and protective measures before the Cross-Border Insolvency Regulations 2006
In the absence of the EIR regime, the only cross-border recognition instrument for insolvency proceedings available under English law is the Cross-Border Insolvency Regulations 2006 ('CBIR'),[93] which gives effect in the United Kingdom to the UNCITRAL Model Law on Cross-Border Insolvency of 1997 ('MLCBI').[94] However, the application of the CBIR to the CNC encounters insuperable substantive obstacles that prevent the Italian proceeding from accessing the recognition sought, essentially due to failure to meet the definitional requirements of “foreign proceeding”.
The fundamental requirement of the CBIR is that the proceeding for which recognition is sought must constitute a “foreign proceeding” within the meaning of Art. 2(i) of Schedule 1 to the CBIR. That provision defines “foreign proceeding” as “a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation”.[95] The definition replicates that in Art. 2(a) of the MLCBI.[96] The CNC does not satisfy at least three of the cumulative requirements contained therein.
Firstly, the CNC is not a “collective” proceeding in the sense required by the MLCBI. As extensively analysed at §§ 2.1-2.3, the CNC does not establish collective creditor proceedings, does not suspend each creditor's individual right to bring proceedings (save upon application for protective measures to the court), does not distribute assets on pari passu principles and does not bind non-adhering creditors to any agreement eventually reached. Proceedings that merely facilitate confidential negotiations between the debtor and creditors willing to negotiate do not have a collective character in the sense required by the MLCBI, which presupposes that all creditors are given the opportunity to participate in the proceeding and that none of them may act individually outside it.
Secondly, the CNC does not satisfy the requirement that “the assets and affairs of the debtor are subject to control or supervision by a foreign court”.[97] In the course of the CNC, the entrepreneur retains full management of the enterprise, as seen; the expert appointed by the Chamber of Commerce (an administrative body, not a judicial organ) is a facilitator with no management or supervisory powers; the Italian court intervenes only at the debtor's request for protective or interim measures, without acquiring a role of continuous supervision of the assets. Neither the expert nor the court “supervises” the business management in a continuous and pervasive manner, as would be required for the debtor to be said to be subject to the “control or supervision” required by the provision.
Thirdly, serious doubts exist as to whether the proceeding satisfies the requirement that it be “pursuant to a law relating to insolvency”. The CNC is a pre-collective instrument that is activated when crisis or insolvency is “reasonably foreseeable” (Art. 12(1) CCII),[98] not when insolvency is current. It is debated whether the threshold for access to the CNC, potentially lower than that of collective insolvency proceedings proper, places the CNC within the orbit of insolvency law in the MLCBI sense, or whether it falls instead within that space of pre-insolvency consensual management that the UNCITRAL Guide itself indicates as falling outside the Model Law.
These conclusions are confirmed by the approach of the Supreme Court in Rubin v Eurofinance SA,[99] in which Lord Collins held that the CBIR is a more limited instrument than the EIR: it does not deal with choice-of-law questions and does not provide a regime for determining when the lex concursus should prevail over the law of the contract. As Paterson has observed,[100] this makes it entirely unsurprising that the English courts have declined to override the Rule in Gibbs in cross-border corporate insolvency cases on the strength of the CBIR regime alone.
As regards protective measures considered in isolation: even where the Italian court has made an order under Art. 18 CCII staying enforcement and precautionary actions, such an order does not in itself constitute “foreign proceedings” for CBIR purposes. The protective order is accessory in nature to the CNC; in the absence of recognition of the main proceeding as a foreign proceeding, no accessory relief can be granted under Arts. 20-21 CBIR.[101] The Italian debtor subject to the CNC therefore cannot invoke the CBIR to obtain in England the functional equivalent of an injunction against enforcement actions by English creditors.
3.4 . Protective measures and the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments
An alternative argument might be to seek recognition of the order granting protective measures as a foreign judgment in civil or commercial matters under the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (“2019 Hague Convention”),[102] in force for the United Kingdom from 1 July 2025 following ratification on 27 June 2024.[103] However, this path is precluded by two distinct, independent and cumulative conventional obstacles, which operate even if one wishes to disregard the overall characterisation of the CNC as a pre-insolvency proceeding.
First, Art. 2, par. 1, lett. (e) of the 2019 Hague Convention excludes from its scope matters relating to “insolvency, composition, resolution of financial instruments, and analogous matters”.[104] Protective measures under Art. 18 CCII are an accessory of the CNC, which is itself an instrument of out-of-court resolution of business crisis aimed at preventing insolvency; they may therefore fall, at minimum, within the category of 'analogous matters' or, directly, within the notion of 'composition' in the broad sense that encompasses proceedings through which the debtor seeks to reach agreements with creditors to avoid liquidation. According to the Explanatory Report to the Convention by Garcimartín and Saumier,[105] the concept of “composition” encompasses proceedings in which the debtor reaches agreements with creditors to prevent liquidation, typically accompanied by a moratorium on payments. A protective measure, which is functionally a moratorium accessory to a composition proceeding, falls squarely within this exclusion.
Secondly, Secondly, even if one were to attempt to classify the protective measures as a civil remedy distinct from the CNC, the court order granting them is in the nature of a provisional protective measure, not a judgment on the merits of a civil dispute between identified parties. Art. 2(2) of the 2019 Hague Convention expressly excludes from the Convention's scope “provisional and protective measures”,[106] irrespective of their civil or commercial character. The protective measures order, which suspends creditors' enforcement actions for a limited, revocable and non-definitive period, is by definition a provisional and protective measure, not a judgment on the merits. The 2019 Hague Convention requires that the decision for which recognition is sought be a 'judgment' in the technical conventional sense, that is, a decision 'on the merits' of a civil dispute;[107] this requirement is not satisfied by an order that merely temporarily suspends the exercise of rights without establishing, denying or modifying them on the merits.
3.5 . The Part A1 Moratorium as a parallel procedure to protect the CNC
Faced with the impossibility of recognising the CNC and protective measures in the United Kingdom through the conventional or regulatory channels examined above, English domestic law offers an instrument that can serve, at least partially, the same protective function: the Part A1 Moratorium, introduced by the Corporate Insolvency and Governance Act 2020 ('CIGA 2020') and inserted in Part A1 of the Insolvency Act 1986.[108] This is a standalone moratorium, at the debtor's initiative (debtor in possession), which does not require the opening of a formal collective insolvency proceeding and is supervised by a monitor (a licensed insolvency practitioner) who verifies the conditions of eligibility and monitors progress. Its structure makes it functionally analogous to the standalone moratorium contemplated by Art. 6 of the Restructuring Directive on the preventive restructuring framework, of which it shares the logic of temporary debtor protection during negotiations.
Access to the Part A1 Moratorium is in principle open to all companies that are not expressly excluded by Schedule ZA1 of the Insolvency Act 1986.[109] The exclusions relate primarily to financial institutions, banks, insurance companies and other regulated entities, for which specialised resolution regimes exist. Access to a moratorium is, moreover, available to an overseas company that demonstrates a sufficient connection with England, upon application to the High Court of Justice of London. An Italian company having significant assets or creditors in English territory could in principle access the moratorium directly under s. A5 IA 1986 with all the documents required by the following s. A6 IA 1986, which include a statement from the proposed monitor certifying the company's eligibility and the reasonable prospect of rescue the company (and not the business alone) as a going concern.[110] The moratorium runs from the date of the High Court order,[111] however the initial duration is twenty business days, extendable for a further twenty business days by simple filing by the directors, or for longer periods up to a maximum of twelve months with creditors' consent or by court order.[112]
The effects of the Part A1 Moratorium are described in ss. A20-A23 of the Insolvency Act 1986 and include a prohibition on: commencing or continuing legal proceedings, enforcing security, repossessing goods subject to hire or leasing arrangements, and forfeiting leases of premises for non-payment.[113] These effects are functionally analogous to those of Italian protective measures, with the fundamental difference that they operate by virtue of English law on English territory and require no cross-border recognition mechanism.
The Part A1 Moratorium presents, however, a structural limitation of first importance that significantly reduces its effectiveness precisely against the category of creditors most significant for an Italian business in the CNC with English-law-governed debts. Under s. A18 IA 1986, debts qualifying as “debts or other liabilities arising under a contract or other instrument involving financial services”, a category that typically encompasses bank lending agreements, bond issuances and derivative contracts, that accrue during the moratorium must continue to be paid promptly. Failure to pay obliges the monitor to bring the moratorium to an early end.[114] Since it is precisely this category of creditors, banks and bondholders with English-law-governed contracts, that represents the principal risk factor for the Italian entrepreneur in the CNC with assets or creditors in the United Kingdom, the protection afforded by the Part A1 Moratorium is structurally partial and does not cover the core of the problem.
The Part A1 Moratorium may nonetheless prove useful as part of a parallel proceedings strategy: the Italian entrepreneur could open the CNC in Italy for Italian debts and creditors and, simultaneously, obtain a Part A1 Moratorium in England to protect its English assets from enforcement actions by non-financial creditors based in the United Kingdom. Re Cimolai SpA and, in the corporate restructuring context, Re Hong Kong Airlines Ltd illustrate the practicability of parallel proceedings in different jurisdictions, with the English court sanctioning its own instrument independently of the concurrent foreign proceeding.[115] In this scenario, the English monitor and the expert appointed in the Italian CNC would need to co-ordinate their activities closely, since the statement that the monitor must file in the High Court affirming that “it is likely that a moratorium for the company would result in the rescue of the company as a going concern” must be capable of being grounded in the facts of the Italian restructuring process, and that in the current state, in the absence of any institutional legal co-operation mechanism between the CNC and the CBIR regime, this would fall to the company's advisers.
Looking ahead, Paterson has highlighted the emergence in English law of a “synthetic proceedings” approach, whereby creditors in a particular jurisdiction contractually agree to be bound by the outcomes of a foreign restructuring plan, without the need to open a formal secondary proceeding in the country where those creditors are located.[116] This approach, already tested in English practice in the EIR context, could in principle be adopted in the CNC setting, were English creditors to agree to recognise as binding the agreement reached in Italy. The condition, however, is precisely that which the Rule in Gibbs makes most difficult to achieve: the informed and genuine consent of creditors with English-law-governed claims, who, being well aware of the strength of their contractual position, often have strong incentives not to adhere to a foreign proceeding. This ultimately brings the question back to the terrain of the negotiating process that is the very essence of the negotiated composition: which confirms, once again, that the CNC is a consensual and negotiated instrument, not a coercive one, whose cross-border effectiveness depends to a decisive extent on the willingness of foreign creditors to participate in the negotiations.
4 . Conclusions
The analysis conducted in the preceding paragraphs reveals a structural fracture in the current architecture of European and international insolvency law. The Regulation (EU) 2015/848 was designed for a world in which the dominant model of cross-border insolvency was a formal collective proceeding, publicly opened and under judicial supervision: the Italian judicial liquidation, the concordato preventivo, the German Insolvenzverfahren, the French sauvegarde in its public variant. The emergence, in several Member States, of confidential, negotiated and out-of-court pre-insolvency instruments (the CNC, the private variant of the Dutch WHOA, the French conciliation, the German Restrukturierungsplan in its non-public configuration, the Spanish moratoria pre-concursal) has revealed a category of instruments for which the mandatory requirements of the Regulation on publicity, collectivity and structural connection to a formal insolvency proceeding were never conceived and appear to be difficult to satisfy. Save for their inclusion in Annex A of the EIR, these instruments are too closely connected to insolvency to fall within the scope of the Brussels I-bis Regulation, but are at the same time too out-of-court, consensual and confidential to satisfy the threshold conditions of Art. 1 of the EIR. They inhabit a structural no man's land in the current European private international law framework, and the CNC resides there with particular clarity.
In this context, the first and most fundamental practical consequence of the analysis is that the CNC may well lack autonomous cross-border effectiveness both within and outside Europe. For an Italian business with creditors established in the internal market, therefore, the CNC would not offer a unitary recognition regime (under Art. 19 EIR), no automatic stay of foreign enforcement proceedings, and no guarantee that its protective measures will be recognised beyond Italian borders. Each Member State in which a creditor is established must be approached individually, according to its own domestic private international law rules, which in some jurisdictions, may impose conditions on the recognition of foreign pre-insolvency measures no less stringent than the threshold requirements of the EIR itself. The debtor in the CNC faced with a European creditor refusing to participate in negotiations is forced into a binary choice: negotiate the partecipation or resort to a formal proceeding (it must be noted, through the use of the unified proceeding under Art. 40 CCII together with the protective measures under Art. 54 CCII -these being measures with intra-European effectiveness-). Neither option is well suited to the early stage of the crisis at which the CNC is intended to intervene. The absence of a European recognition mechanism is not a peripheral shortcoming; it is the central structural limitation of the CNC as a cross-border restructuring instrument, and it reflects precisely a deliberate, structural legislative choice (confirmed by the October 2025 update of Annex A) to keep the instrument within the contractual domain of crisis management and outside that of pure collective proceedings.
The comparison with English law and with extra-European jurisdictions is even less flattering, and the gap between the domestic utility of the instrument and its cross-border reach becomes an abyss. Maintaining focus on Italian-British relations, four dimensions require careful strategic reflection from the practitioner advising an Italian debtor in the CNC with significant credit exposure under English law.
(i) The need for early creditor engagement.
The fundamental obstacle under English law is the Rule in Gibbs. As confirmed in the Bakhshiyeva and OJSC IBA decisions, and as supported on contractualist foundations by Paterson and the Financial Markets Law Committee, an English-law-governed obligation cannot be extinguished, modified or suspended by a foreign proceeding (including the CNC and any agreement or protective measure generated by it) unless the creditor has individually and genuinely consented. This rule is not a procedural formality: it is a substantive conflict-of-laws rule that treats the lex contractus as the only legal order competent to determine the fate of English-law-governed obligations. Its practical consequence is that the window of effective protection closes the moment an English creditor decides not to participate in the Italian proceeding. For an Italian business in the CNC with English-law-governed obligations or contracts, the strategic imperative is therefore to initiate contact with English creditors as early as possible (ideally before the formal opening of the CNC) and to structure the negotiating process so as to offer those creditors a genuine commercial reason to adhere. Once enforcement proceedings have been commenced in England, the CNC offers no remedy save through the instruments that English law places at the debtor's disposal. Early engagement, substantive transparency and credible economic proposals are the primary instruments and, in practice, often the only ones, available.
The fundamental obstacle under English law is the Rule in Gibbs. As confirmed in the Bakhshiyeva and OJSC IBA decisions, and as supported on contractualist foundations by Paterson and the Financial Markets Law Committee, an English-law-governed obligation cannot be extinguished, modified or suspended by a foreign proceeding (including the CNC and any agreement or protective measure generated by it) unless the creditor has individually and genuinely consented. This rule is not a procedural formality: it is a substantive conflict-of-laws rule that treats the lex contractus as the only legal order competent to determine the fate of English-law-governed obligations. Its practical consequence is that the window of effective protection closes the moment an English creditor decides not to participate in the Italian proceeding. For an Italian business in the CNC with English-law-governed obligations or contracts, the strategic imperative is therefore to initiate contact with English creditors as early as possible (ideally before the formal opening of the CNC) and to structure the negotiating process so as to offer those creditors a genuine commercial reason to adhere. Once enforcement proceedings have been commenced in England, the CNC offers no remedy save through the instruments that English law places at the debtor's disposal. Early engagement, substantive transparency and credible economic proposals are the primary instruments and, in practice, often the only ones, available.
(ii) Absence of recognition under the CBIR or English common law.
As demonstrated at § 3.3, the CNC does not satisfy any of the three cumulative definitional requirements that qualify a “foreign proceeding” under Art. 2, lett. (i) of Schedule 1 to the CBIR. Neither the automatic stay provided for by Art. 20 of Schedule 1 to the CBIR nor the discretionary relief of Art. 21 is therefore available. Protective measures made by the Italian court under Arts. 18-19 CCII are similarly inaccessible: as measures accessory to a main proceeding that has not been recognised, they cannot independently found relief under the CBIR. English common law offers nothing further: in the absence of any obligation deriving from the Insolvency Regulation (extinguished by Brexit) and without recognition under the CBIR, the English courts have no legal basis on which to give effect to Italian orders relating to the CNC. The 2019 Hague Convention, in force for the United Kingdom from 1 July 2025, cannot assist since it excludes composition proceedings (Art. 2, par. 1, lett. (e)) and provisional and protective measures (Art. 2, par. 2) from its scope of operation. The Italian debtor is, as a matter of law, entirely unprotected in England, save by recourse to the instruments that English law can make available to it.
As demonstrated at § 3.3, the CNC does not satisfy any of the three cumulative definitional requirements that qualify a “foreign proceeding” under Art. 2, lett. (i) of Schedule 1 to the CBIR. Neither the automatic stay provided for by Art. 20 of Schedule 1 to the CBIR nor the discretionary relief of Art. 21 is therefore available. Protective measures made by the Italian court under Arts. 18-19 CCII are similarly inaccessible: as measures accessory to a main proceeding that has not been recognised, they cannot independently found relief under the CBIR. English common law offers nothing further: in the absence of any obligation deriving from the Insolvency Regulation (extinguished by Brexit) and without recognition under the CBIR, the English courts have no legal basis on which to give effect to Italian orders relating to the CNC. The 2019 Hague Convention, in force for the United Kingdom from 1 July 2025, cannot assist since it excludes composition proceedings (Art. 2, par. 1, lett. (e)) and provisional and protective measures (Art. 2, par. 2) from its scope of operation. The Italian debtor is, as a matter of law, entirely unprotected in England, save by recourse to the instruments that English law can make available to it.
(iii) The Part A1 Moratorium: a tool of partial protection.
As seen in the analysis, among these instruments the Part A1 Moratorium under Part A1 of the IA 1986 is the most accessible English domestic instrument, and the most analogous to protective measures, for an Italian debtor seeking protection against English creditors. It is debtor-in-possession in character, does not require the opening of a formal insolvency proceeding and provides a statutory stay of a range of individual enforcement actions for an initial period of 20 business days, extendable up to 12 months. An Italian company with a sufficient connection to England (a threshold applied in practice to Italian companies having assets, employees, registered branches or significant creditors in England) may access the moratorium by application to the High Court. The expert appointed in the Italian CNC and the English monitor will need to co-ordinate closely, since the monitor must file in court a statement that there is a reasonable prospect of the company's rescue as a going concern, which must be capable of being founded in the facts of the Italian restructuring process. The structural limitation is, however, decisive: s. A18 IA 1986 excludes “debts or other liabilities arising under a contract or other instrument involving financial services” from its protection, obliging the debtor to meet obligations of this type that fall due during the moratorium period. Failure to pay gives rise to the monitor's duty to bring the moratorium to an early end under s. A38(1)(b). Since it is precisely this category of financial creditors that represents the central risk profile of a CNC with cross-Channel exposure, the Part A1 Moratorium provides effective protection only against the residual class of non-financial creditors. Its utility is real but structurally limited. In addition, where there are holdout creditors, it will in any event be necessary to engage with English insolvency law instruments and English insolvency proceedings, as was the case in Re Cimolai.
As seen in the analysis, among these instruments the Part A1 Moratorium under Part A1 of the IA 1986 is the most accessible English domestic instrument, and the most analogous to protective measures, for an Italian debtor seeking protection against English creditors. It is debtor-in-possession in character, does not require the opening of a formal insolvency proceeding and provides a statutory stay of a range of individual enforcement actions for an initial period of 20 business days, extendable up to 12 months. An Italian company with a sufficient connection to England (a threshold applied in practice to Italian companies having assets, employees, registered branches or significant creditors in England) may access the moratorium by application to the High Court. The expert appointed in the Italian CNC and the English monitor will need to co-ordinate closely, since the monitor must file in court a statement that there is a reasonable prospect of the company's rescue as a going concern, which must be capable of being founded in the facts of the Italian restructuring process. The structural limitation is, however, decisive: s. A18 IA 1986 excludes “debts or other liabilities arising under a contract or other instrument involving financial services” from its protection, obliging the debtor to meet obligations of this type that fall due during the moratorium period. Failure to pay gives rise to the monitor's duty to bring the moratorium to an early end under s. A38(1)(b). Since it is precisely this category of financial creditors that represents the central risk profile of a CNC with cross-Channel exposure, the Part A1 Moratorium provides effective protection only against the residual class of non-financial creditors. Its utility is real but structurally limited. In addition, where there are holdout creditors, it will in any event be necessary to engage with English insolvency law instruments and English insolvency proceedings, as was the case in Re Cimolai.
(iv) Circumvention strategies.
The use of English law instruments to bind holdout creditors and give effect to the Italian restructuring and the agreements reached. The author is one of the strongest advocates of the use of parallel insolvency proceedings to give effect to Italian insolvency proceedings outside the European Union. It is now necessary to consider what instruments are available to render such protection and effectiveness real in the English jurisdiction in brief. Should the CNC conclude successfully and end in one of the instruments listed in Art. 23, par. 1 and par. 2, the most effective English instrument for giving effect to the outcomes of the CNC in England, thus binding all English-law creditors who refuse voluntarily to adhere to the Italian restructuring, is the Part 26A restructuring plan under Part 26A of the Companies Act 2006. Like a debt restructuring agreement and a PRO, it operates as a scheme sanctioned by the English court that binds all classes of creditors through a cross-class cram-down mechanism. The instrument has been frequently[117] and successfully used in cross-border contexts, precisely to work around (or more accurately, to make use of the available instruments to address) the Rule in Gibbs. Where at least one class approves the plan (with 75% by value within the class) and the court finds that no dissenting member would be worse off than under the “relevant alternative” (typically liquidation), the plan may be sanctioned even against the opposition of dissenting classes, including classes of financial creditors voting against. The crucial feature is that, the plan being sanctioned by an English court in application of English company law, it operates as a domestic English instrument and is therefore compliant with the Rule in Gibbs: it extinguishes or modifies English-law-governed obligations directly, by authority of the English court, without relying on any foreign proceeding. An Italian debtor with a sufficient connection to England can therefore give effect to the outcome of the CNC against English-law creditors who have chosen not to participate in the CNC. The co-ordination challenge is real but manageable: the terms offered in the Part 26A plan must be consistent with those offered in the Italian proceeding in order to avoid opportunistic selection of claims as between the two procedures.
The use of English law instruments to bind holdout creditors and give effect to the Italian restructuring and the agreements reached. The author is one of the strongest advocates of the use of parallel insolvency proceedings to give effect to Italian insolvency proceedings outside the European Union. It is now necessary to consider what instruments are available to render such protection and effectiveness real in the English jurisdiction in brief. Should the CNC conclude successfully and end in one of the instruments listed in Art. 23, par. 1 and par. 2, the most effective English instrument for giving effect to the outcomes of the CNC in England, thus binding all English-law creditors who refuse voluntarily to adhere to the Italian restructuring, is the Part 26A restructuring plan under Part 26A of the Companies Act 2006. Like a debt restructuring agreement and a PRO, it operates as a scheme sanctioned by the English court that binds all classes of creditors through a cross-class cram-down mechanism. The instrument has been frequently[117] and successfully used in cross-border contexts, precisely to work around (or more accurately, to make use of the available instruments to address) the Rule in Gibbs. Where at least one class approves the plan (with 75% by value within the class) and the court finds that no dissenting member would be worse off than under the “relevant alternative” (typically liquidation), the plan may be sanctioned even against the opposition of dissenting classes, including classes of financial creditors voting against. The crucial feature is that, the plan being sanctioned by an English court in application of English company law, it operates as a domestic English instrument and is therefore compliant with the Rule in Gibbs: it extinguishes or modifies English-law-governed obligations directly, by authority of the English court, without relying on any foreign proceeding. An Italian debtor with a sufficient connection to England can therefore give effect to the outcome of the CNC against English-law creditors who have chosen not to participate in the CNC. The co-ordination challenge is real but manageable: the terms offered in the Part 26A plan must be consistent with those offered in the Italian proceeding in order to avoid opportunistic selection of claims as between the two procedures.
The overall conclusion is that the Italian entrepreneur confronting the English dimension of a restructuring in the CNC must approach the matter as a necessarily dual-track operation: an Italian track within the CNC, intended for Italian creditors and any foreign creditors who participate voluntarily, and an English track aimed at binding English-law creditors who refuse to adhere through the use of English law instruments, and thereby neutralising the extraterritorial reach of the Rule in Gibbs. The absence of any legal bridge between the two tracks is a direct consequence of Brexit, the structural gap in the EIR and the definitional requirements of the CBIR. This absence cannot be filled by private international law scholarship: it can only be managed through contractual architecture, commercial negotiation and, where the stakes justify it, parallel proceedings in England. This is, in the final analysis, the cross-border cost of an instrument that the Italian legislature has deliberately conceived to remain within the domain of international insolvency law.
Note:
[1]
Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast), OJ L 141, 5 June 2015, pp. 19–72. Annex A to the Regulation contains the exhaustive list of Member States’ insolvency proceedings falling within its scope. The CNC does not appear on that list for Italy, a formal fact of primary importance for the purposes of the private international law issue examined in the following paragraphs.
[2]
Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, debt discharge and disqualifications, and measures to increase the effectiveness of restructuring, insolvency and debt discharge proceedings, and amending Directive (EU) 2017/1132, OJ L 172, 26 June 2019, pp. 18–55.
[3]
Legislative Decree of 24 August 2021, No. 118, converted with amendments by Law of 21 October 2021, No. 147, on "Urgent measures concerning business crisis and corporate rescue, together with further urgent measures concerning justice", Official Gazette No. 202 of 24 August 2021. The provisions were subsequently transposed into Arts. 12-25-undecies of Legislative Decree of 12 January 2019, No. 14 (Code of Corporate Crisis and Insolvency – CCI), as amended by Legislative Decree of 17 June 2022, No. 83.
[4]
Law of 19 October 2017, No. 155 had delegated the Government to adopt the Code of Corporate Crisis and Insolvency, subsequently approved by Legislative Decree of 12 January 2019, No. 14. The original version of the Code provided, in Arts. 12-25, for a system of "early warning and assisted composition of the crisis" entrusted to the OCRI (Organisational Body for Business Crisis Composition), whose measures were abolished by Legislative Decree No. 118/2021 and replaced by the CNC, precisely on account of the structural limitations acknowledged in the early-warning system in its first applications.
[5]
Cork Report (Cmnd 8558, 1982); Insolvency Act 1986; Productivity and Enterprise: Insolvency — A Second Chance (Cm 5234, 2001); Enterprise Act 2002; Corporate Insolvency and Governance Act 2020; Powdrill v Watson [1995] 2 AC 394, 442 (HL); V. Finch and D. Milman, Corporate Insolvency Law: Perspectives and Principles (3rd edn, CUP 2017); R. Goode, Principles of Corporate Insolvency Law (5th edn, Sweet & Maxwell 2018); S. Frisby, "In Search of a Rescue Regime: The Enterprise Act 2002" (2004) 67 MLR 247. For the US comparator, see the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 1101 ff.) and E. Warren and J. L. Westbrook, "The Success of Chapter 11: A Challenge to the Critics" (2009) 107 Mich L Rev 603.
[6]
Recitals 1, 2 and 3, Directive (EU) 2019/1023. Recital 1 states that open and competitive markets require the regulatory framework to adapt to take account of the need to save economically viable debtors; Recital 2 notes that divergences between national laws on restructuring, insolvency and discharge of debt give rise to distortions of competition in the internal market; Recital 3 identifies a "preventive restructuring culture" as the systemic objective of the reform.
[7]
Art. 1(1)(a), Directive (EU) 2019/1023: "Member States shall ensure that, where there is a likelihood of insolvency, debtors have access to a preventive restructuring framework that enables them to restructure, with a view to preventing insolvency and ensuring their viability, without prejudice to the possibility of excluding cases where other remedies have already been exhausted".
[8]
Art. 4(6), Directive (EU) 2019/1023: "Member States may provide that the authorisation of a judicial or administrative authority shall not be required, or that the judicial or administrative authority shall only be involved to the extent strictly necessary, in relation to: (a) the adoption of a restructuring plan; (b) the opening of the preventive restructuring framework; (c) the stay of individual enforcement actions".
[9]
Explanatory Report to Legislative Decree of 24 August 2021, No. 118, p. 2: "The decree [...] intends to give [...] complete and early implementation to Directive [...] 2019/1023 EU concerning preventive restructuring frameworks by introducing, for businesses in a state of crisis or reversible insolvency, a new instrument to assist businesses in difficulty, of a negotiated and out-of-court nature".
[10]
Explanatory Report to Legislative Decree of 24 August 2021, No. 118, cited, p. 2. The need for "early" implementation of the Directive was motivated by the urgency of providing businesses with instruments for managing the Covid-19 economic crisis; however, the choice to establish an instrument of a negotiated-out-of-court nature reflects a precise structural and long-term legislative policy choice, not a contingent one.
[11]
Explanatory Report to Legislative Decree of 24 August 2021, No. 118, p. 2, sub "Illustration of the measures": the instrument is defined as "of a negotiated and out-of-court nature", with the aim of "preserving the confidentiality of the situation of difficulty" and "maximising the prospects for a positive outcome of negotiations". On this point, in the sense of the "change of pace" and "change of culture" as fundamental interpretive coordinates, see E. MINERVINI, "La 'composizione negoziata' nella prospettiva del recepimento della direttiva 'Insolvency'. Prime riflessioni", in Ristrutturazioni Aziendali, 17 October 2021, §§1-2.
[12]
R.G. Guidotti, "La composizione negoziata e la direttiva Insolvency: prime note", in Dirittodellacrisi.it, 2 February 2022, §4: "The application for appointment of the expert does not open collective creditor proceedings and does not result in any dispossession; it must therefore be considered that, also for these characteristics expressly indicated in the Report to the decree, the negotiated composition is not, in principle, a collective insolvency proceeding in the technical sense".
[14]
Art. 13(1) CCII: the expert is appointed by the commission established at the Chamber of Commerce, Industry, Craft and Agriculture competent for the place in which the entrepreneur's registered office is situated, upon application by the entrepreneur. The commission selects the expert from a list prepared by the same Chamber of Commerce, supplemented by persons indicated by the President of the Court and the Prefect.
[15]
R.G. Guidotti, op. cit., §4: unlike collective insolvency proceedings in the technical sense, in the CNC "there is no crystallisation of liabilities, no formal collective creditor proceedings are opened, no dispossession occurs nor is the entrepreneur's legal capacity in any way limited". These characteristics are expressly mentioned in the Explanatory Report as qualifying features deliberately intended by the legislature. See also Art. 21 CCII.
[17]
Art. 12(1) CCII: "An entrepreneur who finds himself in conditions of financial or economic-financial imbalance making his crisis or insolvency probable may request [...] the appointment of an expert [...] where the rescue of the business is reasonably achievable. The expert's task is to facilitate negotiations between the entrepreneur, creditors and any other interested parties, with a view to identifying a solution for overcoming the situation referred to in the first sentence".
[19]
Art. 18(1) CCII: protective measures produce the effect of "preventing [...] the acquisition of non-agreed preferential rights and the commencement or continuation of enforcement and precautionary actions against the debtor's assets". S. Bonfatti, op. cit., §2.2, characterises them as "unidirectional" in scope — protection against acts of external aggression, whilst preserving the right to grant security and make payments from within — without establishing any order of priority among creditors themselves.
[20]
The revocability of protective measures is established by Art. 18(6) CCII: the court revokes them "where they prove unsuitable to ensure the good outcome of negotiations or where they cause unjustified prejudice to creditors". Their temporary nature is intrinsic to their functional character: they are not intended to last longer than is necessary to allow the orderly conduct of the negotiating process.
[21]
S. Bonfatti, "Profili della composizione negoziata della crisi d'impresa - Natura giuridica, presupposti e valutazioni comparative", in Dirittodellacrisi.it, 3 February 2022, §2.2. The author demonstrates the non-collective nature of the instrument through five structural indices: (i) the entrepreneur's full capacity to perform any management act; (ii) the absence of crystallisation effects and the unidirectional nature of protective measures; (iii) the absence of external control instruments; (iv) the absence of external authorisations; (v) the insufficient capacity of the special effects (exemption from avoidance; preferential ranking) to attribute a collective character to the instrument.
[22]
S. Bonfatti op. cit., §2.2: the "insufficient capacity of the said special effects — exemption from avoidance; preferential ranking — to attribute a collective insolvency proceeding character to the instrument in question" is demonstrated by the circumstance that exemption from avoidance is also a typical effect of the certified rescue plan, which is not a collective proceeding; and by the limited scope of preferential ranking, confined exclusively to financing authorised by the Court (not to claims arising in connection with or in furtherance of the proceeding, as in concordato preventivo). In similar terms, with reference to out-of-court instruments generally, see G. Corno, L'applicazione del Regolamento n. 848/2015 alle procedure di crisi o di insolvenza dell'ordinamento italiano, in Il Fallimento, 2018, p. 6.
[24]
Subject to the numerous attempts to extend the CNC to insolvent businesses whose rescue is unachievable, solely in order to obtain the benefits of admission to the simplified liquidation concordato — which, in the author's view, remains an abuse of the CNC procedure that the courts must remedy.
[25]
E. Minervini, op. cit., §4 ("The logical fulcrum of the new instrument: the concept of 'viability of rescue'"): "The concept of viability of rescue [...] constitutes the pivot around which the entire instrument revolves. [...] Only if the business is viable does it make sense to activate the CNC; if, on the contrary, rescue is unachievable, the entrepreneur must turn directly to collective insolvency instruments".
[26]
Art. 23(1) to (3) CCII: negotiations within the CNC may conclude with: (a) a contract with one or more creditors capable of ensuring business continuity for at least two years; (b) a moratorium agreement under Art. 62 CCII; (c) an agreement with the effects of a certified rescue plan under Art. 56 CCII; (d) a debt restructuring agreement under Arts. 57, 60, 61 CCII; (e) a restructuring plan subject to homologation under Art. 64 bis CCII; (f) an application for access to concordato preventivo or judicial liquidation.
[27]
Art. 23(1): "(a) conclude a contract, with one or more creditors ((or with one or more parties interested in the rescue transaction)), which produces the effects referred to in Article 25-bis(1), if, according to the expert's report referred to in Article 17(8), it is capable of ensuring business continuity for a period of not less than two years; (b) conclude the moratorium agreement referred to in Article 62; (c) conclude an agreement signed by the entrepreneur, by the adhering creditors ((and by the other parties interested in the rescue transaction who have adhered thereto as well as)) and by the expert which produces the effects referred to in Articles 166(3)(d) and 324. With the signing of the agreement, the expert records that the rescue plan appears consistent with the regulation of the crisis or insolvency.".
[28]
"In addition to the contracts or agreements referred to in paragraph 1, the entrepreneur may also, alternatively: (a) prepare the certified rescue plan referred to in Article 56; (b) apply for homologation of a debt restructuring agreement under Articles 57, 60 and 61. The percentage referred to in Article 61(2)(c) is reduced to 60 per cent where the reaching of the agreement results from the expert's final report or where the application for homologation is filed within sixty days of the communication referred to in Article 17(8); (c) apply for the simplified liquidation concordato referred to in Article 25-sexies; (d) access one of the crisis and insolvency regulation instruments governed by the present code, by Legislative Decree of 8 July 1999, No. 270 or by Legislative Decree of 23 December 2003, No. 347, converted with amendments by Law of 18 February 2004, No. 39. An agricultural entrepreneur may access the instruments referred to in Article 25-quater(4)."
[29]
The functional connection between the CNC and the European business rescue culture is noted by E. Minervini, op. cit., §6, and by R.G. Guidotti, op. cit., §1. On the relationship between the CNC and the Directive model, with particular reference to the Italian choice to place the instrument at a stage even earlier than the "preventive restructuring frameworks" of the Directive, see also A. Leandro, La composizione negoziata e il diritto internazionale privato, in Rivista di diritto internazionale privato e processuale, 2022, §1.
[30]
Recital 16 of the Regulation clarifies that "this Regulation should apply to proceedings which comply with the provisions of insolvency law. It should not apply to proceedings which are based on general company law not designed exclusively for insolvency situations". On the notion of "rules relating to insolvency" see G. Corno, L'applicazione del Regolamento n. 848/2015 alle procedure di crisi o di insolvenza italiane, in IUS/Giuffrè, 21 February 2018, passim.
[31]
See, for example, the long-standing issue of the recognition on the Continent of Schemes of Arrangement, as provided for in Part 26 (sections 895–901) of the Companies Act 2006.
[32]
G. Corno, op. cit., identifies the cumulative concurrence of the requirements as the fundamental structure of Art. 1(1) of the Regulation and expressly excludes out-of-court arrangements, certified rescue plans and moratorium agreements from the scope of the Regulation for lack of public notice and of a basis in a decision opening proceedings.
[33]
G. Nuzzo, Insolvenza transfrontaliera e concorsualità liquida, in Judicium, 6 December 2024, §§ 1-4, who summarises the requirements in six indices (i)-(vi).
[34]
Regulation (EU) 2025/2073 of the European Parliament and of the Council, adopted on 8 October 2025, amends Regulation (EU) 2015/848 on insolvency proceedings. The main objective is to update and replace Annexes A and B of the previous Regulation, adapting the references to the national insolvency laws of the Member States.
[35]
See CJEU, judgment of 22 February 1979, Case 133/78, Gourdain v Nadler; judgment of 16 April 2015, Case C-557/13, Lutz; judgment of 6 July 2017, Case C-245/16, Nerea. In the literature: G. Corno, op. cit.; G. Nuzzo, op. cit., § 4.ri.
[36]
A. Leandro, Negotiated settlements in private international law: reflections from the perspective of, but not limited to, Regulation (EU) 2015/848, in Dirittodellacrisi.it, 145, February 2022, § 4 (‘A. Leandro, Dirittodellacrisi.it, 2022’): “the fact that negotiated settlement was not included in Annex A is of little consequence because the latest revision of the annex was initiated before it became part of the Italian legal system. On the other hand, the annex is always subject to revision whenever it is necessary to include new national procedures”.
[38]
Regulation 2025/2073, adopted on 8 October 2025, published on 17 October 2025, and entered into force on 6 November 2025.
[39]
A. Leandro, Dirittodellacrisi.it, 2022, § 4: "The negotiated composition is moreover devoid of a public nature in the sense accepted by the Regulation, that is as a requirement which, simultaneously, enables creditors to become aware of the proceeding, to lodge their claims with a view to the collective character of the proceeding, and to be able to challenge the jurisdiction of the court that opened the proceeding (Recital 12). Public notice is contrasted with confidentiality, understood as a characteristic of a proceeding whose opening would be unknown to a creditor or court 'situated in another Member State', 'thus making it difficult to predict [its] recognition [...] throughout the Union' (Recital 13). These are requirements and purposes that are lacking in the negotiated composition".
[41]
G. Nuzzo, Insolvenza transfrontaliera e concorsualità liquida, in Judicium, 6 December 2024, § 4, p. 6 (index v): the CNC assisted by protective measures is "'public' in that the application for the grant of protective measures is published in the companies register" pursuant to Art. 18(1) CCII; see also A. Leandro, La composizione negoziata nel diritto internazionale privato, cit., § 5, p. 14, in relation to the variant with protective measures.
[42]
The contractual choice made by the parties prior to the commencement of the CNC proceedings, which entails, pursuant to Articles 3 and 12 of Regulation (EC) No 2008/593 (Rome I) and Article 25 of Regulation (EU) No 2012/1215 (Brussels I-bis), that the contract, as well as its obligations, remedies, performance, non-performance and contractual amendments, shall be governed by and assessed on the basis of the law of the chosen Member State in accordance with national procedures.
[43]
The public variant of the WHOA (Wet Homologatie Onderhands Akkoord, in force from 1 January 2021, Arts. 369 ff. Wetboek van Burgerlijke Rechtsvordering) was included in Annex A of Regulation (EU) 2015/848 by Regulation (EU) 2021/2260 of the European Parliament and of the Council of 15 December 2021 (OJ L 455, 20.12.2021, p. 1), with effect from 9 January 2022. The confidential variant (besloten/onderhands) was deliberately excluded from Annex A, consistently with Recital 13 of the Regulation: the Dutch legislature consciously accepted that the confidential variant could not benefit from automatic recognition under Art. 32(1) EIR, in order to preserve its confidentiality and attractiveness for domestic restructurings. In similar terms, in professional practice, see the WHOA Booklet (2023 edition), p. 8 ff., produced by the Dutch restructuring bar for cross-border restructurings, available at https://dwbxnuhxoazve.cloudfront.net/OLD/pdfs-old/20230116-WHOA-Booklet.pdf; and the article "Automatic recognition of the Dutch undisclosed WHOA", in Nederlands Internationaal Privaatrecht (NIPR) 2021/1, available at https://www.nipr-online.eu/pdf/2021-182.pdf.
[44]
Recital 13 of Regulation (EU) 2015/848 reads: "Confidential insolvency proceedings should be excluded from the scope of this Regulation, since their confidential nature makes it impossible for a creditor or a court situated in another Member State to know that such proceedings have been opened and would consequently make them difficult to recognise throughout the Union". The same bifurcated structure is found in Germany (StaRUG, Unternehmensstabilisierungs- und -restrukturierungsgesetz, in force from 1 January 2021): only the public variant — the so-called öffentliche Bekanntmachung, accessible from July 2022 — was included in Annex A by Regulation (EU) 2021/2260, cited; the private variant remains excluded. In France, the mandataire ad hoc and conciliation procedures — inherently confidential by statute — have never appeared in Annex A of the Regulation, whether in the original 2000 version or in the 2015 recast. The same applies to the confidential variants of preventive instruments adopted in Luxembourg, Hungary and the Czech Republic: none has been included in Annex A. On this point see B. Wessels, EU Insolvency Regulation – substantial repair work needed, 2022, available at https://bobwessels.nl/blog/2022-03-doc1-eu-insolvency-regulation-substantial-repair-work-needed; and, for the systematic perspective, S. Madaus, Separate domains: contracts and insolvency law, cit., passim.
[45]
The a fortiori argument is consistent with the position expressed by A. Leandro, The Rome I Regulation in EU cross-border insolvency and restructuring, in European Insolvency and Restructuring Journal, EIRJ: 2025-6 (DOI: 10.54195/eirj.23514), § 52: “pre-insolvency schemes lacking public nature as the EIR requires fall outside the EIR”; §§ 52–60: proposal for an ECR (European Certificate of Restructuring) (“A. Leandro EIRJ 2025”), §§ 52–60: the author, whilst advocating an expansive interpretation of the available instruments, acknowledges that instruments lacking “public nature as the EIR requires” fall outside the scope of the Regulation and proposes the creation of a new European restructuring instrument. The absence of a public variant of the CNC in the Italian legal system – unlike the WHOA and StaRUG, which offer the debtor a choice between confidentiality and automatic recognition – reflects a legislative policy choice that orients the instrument towards the ‘contractual domain’ of crisis management, to use Madaus’s (op. cit., passim), and outside the scope of uniform European insolvency law. In the absence of such a bifurcation, the expansive thesis finds no regulatory anchor in the Italian system that it had, by contrast, in the Dutch system in the public variant of the WHOA.
[46]
V. Minervini, La "composizione negoziata" nella prospettiva del recepimento della direttiva "Insolvency". Prime riflessioni, in Ristrutturazioni Aziendali, 17 October 2021, p. 5 ff., emphasises that the negotiated composition is founded on the concept of "viability of rescue" as a constitutive precondition: the entrepreneur retains control of the business precisely because the objective is rescue, not compulsory liquidation.
[47]
S. Bonfatti, op. cit., § 3, notes that the entrepreneur in the CNC may freely perform acts of ordinary and extraordinary management, including selective payment of creditors, without such conduct giving rise to any avoidance claim or any obligation of par condicio.
[48]
S. Bonfatti, op. cit., § 3: protective measures are "unilateral" and "unidirectional" — they operate in one direction only (in favour of the debtor, against creditors) and do not produce the symmetrical effects typical of collective insolvency measures. Cf. also Nuzzo, op. cit., § 2, who nonetheless draws from this structure the opposite conclusion.
[49]
A. Leandro, Dirittodellacrisi.it, 2022, § 3: "The expert's reaction and the constraint to the said purpose have essentially reputational value, given that the entrepreneur would have little prospect of continuing negotiations if creditors no longer trusted him".
[51]
S. Bonfatti, op. cit., § 4 (index v): the "special effects" of the negotiated composition do not alter its fundamental legal nature.
[53]
Explanatory Report to Legislative Decree of 24 August 2021, No. 118, p. 2, cited in MINERVINI, op. cit., p. 5, and in Guidotti, op. cit., § 1.
[54]
R.G. Guidotti, op. cit., § 4, p. 7. See also G. Nuzzo, op. cit., § 2, p. 4 (whilst reaching different conclusions for the variant assisted by protective measures).
[55]
E. Minervini, op. cit., § 3, pp. 6-7, reconstructs the CNC as an "earliest warning" instrument, earlier than the insolvency thresholds contemplated by Directive (EU) 2019/1023. The threshold of relevance is lowered from "likelihood of insolvency" (Art. 1 Directive) to the "likelihood of the likelihood of insolvency" (L. Panzani).
[56]
On the classification of out-of-court workouts outside the scope of the EIR, see I. Mevorach & A. Walters, ‘Characterisation of pre-insolvency proceedings in private international law’, European Business Organisation Law Review, Vol. 21, 2020, 855–894, § 3.2.2, a contrario. See also Corno, op. cit., who expressly excludes moratorium agreements and certified plans from the scope of the Regulation on the grounds that they lack the requirements of publicity and a basis in an opening decision.
[58]
G. Nuzzo, op. cit., § 4, pp. 5-6, articulates the thesis through the six indices set out in the text.
[59]
G. Nuzzo, op. cit., § 4, pp. 6-7, for the analysis of the Recitals. See also A. Leandro, Dirittodellacrisi.it, 2022, § 5, p. 14.
[60]
A. Leandro, Dirittodellacrisi.it, 2022, § 5, p. 14: "The circumstance that the link between the suspension of individual actions and the proceedings covered by the Regulation is contingent appears to hinder the application of the Regulation".
[61]
I. Mevorach – A. Walters, op. cit., § 3.2.2: the "preliminary to" requirement expresses a structural functional connection, not merely a potential one.
[62]
Recital 11 of the Regulation states explicitly: proceedings for which the suspension is granted "should be preliminary to other proceedings covered by this Regulation". The textual parallel between the provision and the recital excludes expansive evolutive interpretations.
[64]
A. Leandro, Dirittodellacrisi.it, 2022, § 4; Nuzzo, op. cit., § 4. A. Leandro, Dirittodellacrisi.it, 2022, § 5, p. 14. Cf. Art. 23(1) CCII: positive outcomes of the composition include a contract with one or more creditors, a moratorium agreement under Art. 62 CCI, a rescue agreement, a simplified concordato — none of which necessarily requires the opening of a proceeding satisfying letter (a) or (b).
[65]
I. Mevorach – A. Walters, op. cit., § 3.2.2. See also G. Corno, op. cit., who, for the moratorium agreement — structurally analogous to the CNC in terms of early purpose and confidentiality — expressly excludes the applicability of the EIR for lack of the structural instrumental link.
[66]
A. Leandro, Dirittodellacrisi.it, 2022, § 4: "The negotiated composition is moreover devoid of a public nature in the sense accepted by the Regulation, that is as a requirement which, simultaneously, enables creditors to become aware of the proceeding, to lodge their claims with a view to the collective character of the proceeding, and to be able to challenge the jurisdiction of the court that opened the proceeding (Recital 12). Public notice is contrasted with confidentiality, understood as a characteristic of a proceeding whose opening would be unknown to a creditor or court 'situated in another Member State', 'thus making it difficult to predict [its] recognition [...] throughout the Union' (Recital 13). These are requirements and purposes that are lacking in the negotiated composition".
[67]
Recital 11 of the Regulation states explicitly: stay procedures ‘should be prior to other procedures provided for in this Regulation’. The inclusion of this requirement, reiterated in parallel by both the provision and the recital, is the result of a deliberate choice by the European legislator. S. Bonfatti, op. cit., § 3 (index ii). See also G. Nuzzo, op. cit., § 2: in a CNC supported by protective measures, creditors are not prohibited from making payments (Article 18, first paragraph, CCII) and the debtor is not bound by the principle of par condicio.
[70]
Art. 19, par 1 to 7 CCII. The entrepreneur files the application with the competent court on the day following publication of the application and the expert's acceptance, supported by the documents referred to in the second paragraph (three years' accounts, updated financial position, list of creditors with the ten largest by amount, rescue plan with a six-month financial plan, self-certification of viability of rescue). The court schedules the hearing within ten days; the scheduling order is published in the companies register on the following day (third paragraph). At the hearing the court hears the parties, obtains the expert's opinion on the functionality of the measures, may appoint an auxiliary if necessary and, where the measures affect the rights of third parties, hears them; it issues a reasoned order fixing the duration of the measures (30-120 days, extendable to 240) (fourth paragraph). The proceeding follows the forms of Arts. 669 bis ff. of the Code of Civil Procedure, before a single judge; the order is subject to review under Art. 669 terdecies of the Code of Civil Procedure (seventh paragraph). Failure to file or delayed filing of the application renders it ineffective. The order scheduling the hearing is published in the companies register on the day following its pronouncement (third paragraph): a step relevant to the domestic effectiveness of the measure, not invoked as an independent EIR compliance criterion, the relevant requirement of which — "granted by a court" — is satisfied by the judicial character of the order itself.
[71]
Art. 19, par. 4 and 6 CCII: full inter partes proceedings at the hearing, expert's opinion, reasoning of the order; power of revocation on the application of creditors or the expert's notification where the measures do not serve their purpose or appear disproportionate. Directive (EU) 2019/1023, Art. 6 and Recital 28: a preventive suspension instrument may be provided for at an early stage without the safeguards of formal collective proceedings, provided it is "adequate" for the purposes of the instrument; the adequacy standard is met where the proceeding guarantees inter partes proceedings, reasoning and subsequent remedies.
[72]
Art. 19, par. 4, last sentence, CCII: "After hearing the expert, the court may limit the measures to certain steps taken by creditors in protection of their rights or to certain creditors or categories of creditors". The power may be exercised ex officio and does not depend on the debtor's application. CJEU, judgment of 4 October 2018, Case C-649/16, O'Sullivan McCarthy Mussel Development Ltd v Remondis GmbH & Co. KG, point 32 ff.: the requirement of "collectivity" requires uniform effects on the general body of creditors or on a significant part of them.
[73]
Cross-Border Insolvency Regulations 2006 (SI 2006/1030), which gives effect in English law to the 1997 UNCITRAL Model Law on Cross-Border Insolvency. Recognition as "foreign main proceedings" (arts. 15-17 Schedule 1) requires that the debtor's COMI be in the State of origin; for the determination of COMI in the CNC, see §§ 2.2-2.3. The remedy in Art. 21 Schedule 1 is discretionary: the High Court may grant, modify or deny the stay having regard to the interests of local creditors and English public policy. The characterisation of the CNC as "foreign proceedings" within the meaning of Art. 2 Schedule 1 — which requires that "the assets and affairs of the debtor are subject to control or supervision by a foreign court" — remains contentious: judicial supervision of the court in the CNC is episodic and limited to the proceeding under Art. 19 CCII, a factor that English courts might weigh negatively in considering recognition.
[78]
A. Leandro, EIRJ 2025, § 52, § 52: the author acknowledges that preventive restructuring frameworks lacking "public nature as the EIR requires" currently fall outside the EIR. This acknowledgement is in tension with the expansive thesis de lege lata articulated by him in 2022.
[79]
A. Leandro, Dirittodellacrisi.it, 2022, § 4, on the law applicable to contracts concluded in the course of negotiations in the negotiated composition under Regulation (EC) No. 593/2008 ("Rome I").
[80]
A. Leandro, Dirittodellacrisi.it, 2022, § 4: "The contract will circulate abroad as a negotiated instrument, there being at this stage no judicial decision enclosing its contents (in other words, there is no homologation). Remedies for breach will therefore be contractual in nature". On the interaction between the exemption from avoidance under Art. 166(3) CCII and Art. 16 EIR see Leandro 2022, § 3: Art. 16 "freezes the avoidance action governed by the lex concursus 'where a person who has benefited from an act detrimental to the general body of creditors proves that: (a) the act is subject to the law of a Member State other than that of the State of opening of proceedings, and (b) the law of that State does not allow any means of challenging that act in the relevant case'". Madaus, op. cit.; F. Rolfi, La giurisdizione internazionale nella disciplina del Codice della crisi e dell'insolvenza, in IUS/Giuffrè, 19 April 2023, pp. 1-8, for the systematic implications of the characterisation of the CNC as a non-collective instrument from the perspective of private international law.
[81]
See the protracted La Perla case, the first proceeding with universal COMI, opened in both Italy and the United Kingdom after Brexit.
[82]
Antony Gibbs & Sons v La Société Industrielle et Commerciale des Métaux (1890) 25 QBD 399 (CA). The case arose from a French loan governed by English law: the creditor, notwithstanding that the debtor company had been admitted to liquidation in France, could still sue in England for the full amount of the debt, since the foreign liquidation had not effected any novation or discharge under the applicable English law governing the contract.
[83]
Lord Collins of Mapesbury and Jonathan Harris (eds), Dicey, Morris & Collins on the Conflict of Laws (16th edn, Sweet & Maxwell 2023) Rule 211: 'A discharge from any debt or liability under the bankruptcy law of a foreign country outside the United Kingdom is a discharge from that debt or liability if, and only if, it is a discharge under the law applicable to the contract.' The rule is classified among the conflict-of-laws provisions relating to insolvency and debt restructuring.
[84]
Bakhshiyeva v Sberbank of Russia [2018] EWHC 59 (Ch), [2018] All ER 964 (Hildyard J), affirmed on appeal in [2019] EWCA Civ 190, [2020] Bus LR 1061. The judge refused to extend the stay on English-law-governed debts beyond the duration of the Azerbaijani restructuring proceeding, observing that "the proposition for which the Antony Gibbs case stands would be considered entirely obvious by a contract lawyer characterising the question as a contractual one (as to the law applicable to the variation or discharge of a contract) and applying ordinary conflict of law principles" ([2018] EWHC 59 (Ch) at [47]).
[85]
OJSC International Bank of Azerbaijan [2018] EWCA Civ 2802; K Crinson and A Gallagher, 'Fighting on: the rule in Gibbs survives another day' Corp Rescue and Insolvency 47 (2019). In that case the Court of Appeal confirmed that the rule in Gibbs prevents a foreign restructuring plan from binding holders of English-law-governed bonds who have not consented to the plan.
[86]
L. Noirault, 'Rule in Gibbs: The Continuation of Territorialism by Other Means?' (2025) 15 Harvard Business Law Review Columns 325, 330-331, arguing that the rule "frees itself from the [universalism-territorialism] binary, preferring instead to rely on a belief in free market mechanisms" and that its logic is contractualist, not territorialist.
[87]
S. Paterson, 'A Qualified Defence of the Rule in Gibbs' (LSE Law, Society and Economy Working Papers 6/2025, London School of Economics 2025) <https://ssrn.com/abstract=4959732> accessed 27 April 2026.
[88]
S. Paterson (n 6) 13-14 and 24. On the parallel with Regulation (EC) No. 593/2008 ('Rome I'), Art. 12(1)(d) — which subjects "the various ways of extinguishing obligations" to the law applicable to the contract — Paterson observes that "the Gibbs rule is not nearly as exceptional as it is sometimes portrayed to be": it finds a precise counterpart in the conflict-of-laws rules of European contract law.
[89]
Financial Markets Law Committee, 'The Rule in Gibbs: Exploring its value and practical use in the financial markets as a guarantor of legal predictability' (FMLC, 29 February 2024) <https://fmlc.org/publications/paper-the-rule-in-gibbs-exploring-its-value-and-practical-use-in-the-financial-markets-as-a-guarantor-of-legal-predictability/> accessed 27 April 2026.
[90]
S. Paterson (n 6) 1-2: 'The courts show no appetite to enter the fray. In the eyes of the judiciary, the question of whether the rule in Gibbs should be abolished or not is a straightforward question of policy, and the decision is for Parliament.' The previous British Government had launched a consultation on the possible adoption of the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments (MLIJ, 2018), which would have partially eroded the rule; the new government has not yet taken a position.
[91]
Implementation of two UNCITRAL Model Laws on Insolvency Consultation <https://www.gov.uk/government/consultations/implementation-of-two-uncitral-model-laws-on-insolvency/implementation-of-two-uncitral-model-laws-on-insolvency-consultation> accessed 27 April 2026.
[92]
Re Cimolai SpA and Re Luigi Cimolai Holding SpA [2023] EWHC 923 (Ch) (convening) and [2023] EWHC 2193 (Ch) (sanction) (Trower J). The case concerned two Italian companies subject to a concordato preventivo, with creditors holding claims governed by English law; the dual track approach was deemed necessary precisely because of the Rule in Gibbs, which would have allowed those creditors to bring proceedings in England regardless of the outcome of the composition. As Paterson observes, the fact that the debtor had no significant assets in England prevented the issue from arising in concrete terms in the present case: S. Paterson (n 86) 24. On the case, see also A. A. Terraneo, Primi Arresti della High Court of Justice sul Riconoscimento delle Procedure Concorsuali Europee in Inghilterra. When Time is of the Essence, Dirittodellacrisi.it, 26 October 2023.
[93]
Cross-Border Insolvency Regulations 2006 (SI 2006/1030) (CBIR). The CBIR applies to England, Wales and Scotland; it does not apply to Northern Ireland, which has a separate regime. Cf. Howard Morris, 'Substance Over Form: How The Rule In Gibbs Lives On' (Morrison Foerster: UK Updates and Analysis, 8 July 2022) <https://restructuring.mofo.com/topics/substance-over-form-how-the-rule-in-gibbs-lives-on> accessed 27 April 2026.
[94]
UNCITRAL Model Law on Cross-Border Insolvency (1997) (MLCBI). The text is available at UNCITRAL, 'Model Law on Cross-Border Insolvency (1997)' <https://uncitral.un.org/en/texts/insolvency/modellaw/cross-border_insolvency> accessed 27 April 2026.
[95]
CBIR (n 11), Sch 1, art 2(i): '"foreign proceeding" means a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation.' The definition reproduces verbatim Art. 2(a) of the MLCBI.
[96]
MLCBI (n 12), art 2(a). The UNCITRAL Guide to Enactment of the MLCBI (UNCITRAL, 2013) clarifies that the "collectivity" requirement implies that all creditors are given the opportunity to participate in the proceeding and that none of them may act individually outside it: cf. UNCITRAL, 'UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation' (UN Publications 2014) 69-70.
[97]
CBIR (n 11), Sch 1, art 2(i). The requirement that the debtor's assets and affairs be "subject to control or supervision by a foreign court" is consistent with the distinction between a formally supervised proceeding and a mere out-of-court arrangement: the latter, even if facilitated by a third-party professional appointed by a public authority, does not satisfy this requirement.
[98]
Art. 12(1) CCI: the CNC opens when the entrepreneur "finds himself in conditions of financial or economic-financial imbalance making his crisis or insolvency probable". The precondition is therefore the likelihood of future crisis, not actual crisis or insolvency: the CNC has an anticipatory and preventive vocation with respect to the crystallisation of a state of insolvency.
[99]
Rubin v Eurofinance SA [2012] UKSC 46, [2013] 1 AC 236 (Lord Collins at [82]-[88]), in which the Supreme Court held that the CBIR is not fundamentally a regime for the recognition and enforcement of foreign judgments in the general sense, and that its provisions have a more limited scope than the EIR: 'the CBIR does not interfere with the rule in Gibbs' (Paterson (n 6) 4).
[100]
S. Paterson (n 6) 4: 'Given the considerably more limited nature of the CBIR when compared with the EIR, it is not surprising that the English courts have declined to overrule Gibbs in cross-border corporate insolvency law cases on the strength of the CBIR regime alone.' The CBIR offers no choice-of-law regime and does not address the question of when the lex concursus should prevail over the law of the contract.
[101]
CBIR (n 11), Sch 1, art 20 (automatic stay upon recognition of foreign main proceeding: limited automatic stay of certain enforcement actions) and art 21 (discretionary relief: the court may grant further measures, including an extended stay, at the request of the foreign representative). Both the automatic stay and discretionary relief presuppose the recognition of a "foreign proceeding" within the meaning of Art. 2(i); in the absence of recognition, no stay can be ordered by the English court.
[102]
Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, adopted by the Hague Conference on Private International Law (HCCH). The full text is available at HCCH, 'HCCH | #41 – Full text' <https://www.hcch.net/en/instruments/conventions/full-text/?cid=137> accessed 27 April 2026.
[103]
The United Kingdom ratified the Convention on 27 June 2024, by means of the Recognition and Enforcement of Judgments (2019 Hague Convention etc) Regulations 2024; the Convention entered into force for the United Kingdom on 1 July 2025, with limited effect to proceedings commenced after that date. Cf. Reed Smith, 'Simplifying enforcement: UK ratifies 2019 Hague Enforcement Convention' (Reed Smith, July 2024) <https://www.reedsmith.com/en/perspectives/2024/07/simplifying-enforcement-uk-ratifies-hague-enforcement-convention> accessed 27 April 2026.
[104]
2019 Hague Convention (n 20), Art. 2(1)(e). The provision excludes from the scope of the Convention judgments relating to "insolvency, composition, resolution of financial instruments, and analogous matters". The term 'composition' designates proceedings through which the debtor seeks to reach agreements with creditors to reorganise the business and avoid liquidation; 'analogous matters' extend the exclusion to any functionally similar instrument. Cf. Norton Rose Fulbright, 'The Recognition and Enforcement of Judgments (2019 Hague Convention etc) Regulations 2024' (Norton Rose Fulbright, July 2024) <https://www.nortonrosefulbright.com/en/restructuring-touchpoint/blog/2024/07/the-recognition-and-enforcement-of-judgments---2019-hague-convention-etc---regulations-2024> accessed 27 April 2026.
[105]
F. Garcimartín and G. Saumier, Explanatory Report on the 2019 HCCH Judgments Convention (HCCH Publications 2020) paras 62-63: the notion of 'composition' encompasses proceedings in which the debtor reaches agreements with creditors to prevent liquidation, typically accompanied by a moratorium on payments; 'purely contractual arrangements' (purely private agreements with no involvement of any public authority) do not fall within the exclusion, but proceedings involving the intervention of a court or public authority — even only for the grant of a precautionary stay — do fall within it.
[106]
2019 Hague Convention (n 20), Art. 2(2): 'This Convention shall not apply to provisional and protective measures.' The text is unambiguous: provisional and protective measures are excluded from the scope of the Convention irrespective of their civil or commercial character. Cf. Garcimartín and Saumier (n 23) paras 73-74.
[107]
2019 Hague Convention (n 20), Art. 3(1)(b) defines "judgment" as "any decision on the merits given by a court, whatever that decision may be called, including a decree or order, and a determination of costs or expenses by the court (including an officer of the court), provided that the determination relates to a decision on the merits which may be recognised or enforced under this Convention". The requirement that the decision be "on the merits" excludes provisional and protective measures, which by definition do not determine the merits of any civil dispute between the parties.
[108]
Corporate Insolvency and Governance Act 2020 (c 12) ('CIGA 2020'), s 1 and Sch 1, inserting Part A1 into the Insolvency Act 1986. CIGA 2020 entered into force on 26 June 2020. The Part A1 Moratorium constitutes one of the principal insolvency law reform instruments introduced by CIGA 2020, alongside the restructuring plan (Part 26A Companies Act 2006). On the characterisation of the Part A1 Moratorium as a 'standalone moratorium' within the meaning of Art. 6 of Directive (EU) 2019/1023, see supra § 2.8.
[109]
Insolvency Act 1986, Sch ZA1 (inserted by CIGA 2020). The principal exclusions concern: banks and credit instruments (Sch ZA1, Pt 1, paras 1-5); insurance companies (Sch ZA1, Pt 1, para 6); investment firms and capital markets participants (Sch ZA1, Pt 1, paras 11-17); payment and settlement systems (Sch ZA1, Pt 1, para 18); electronic money issuers (Sch ZA1, Pt 1, para 9). These exclusions reflect the consideration that for regulated entities specialised resolution regimes already exist.
[110]
Insolvency Act 1986, s A6 (as amended by CIGA 2020). The directors must file with the court: (i) a notice of intention to obtain a moratorium; (ii) a statement that the company is, or is likely to become, unable to pay its debts; (iii) a statement by the proposed monitor under s A6(3), in which the monitor certifies the company's eligibility and expresses the opinion that the company is "likely to be rescued as a going concern" (s A6(3)(b)). The monitor must be a licensed insolvency practitioner (s A27(1)).
[112]
Insolvency Act 1986, s A8 (initial duration: 20 business days from the day after the moratorium begins); s A13 (extension for a further 20 business days by simple notice filed by the directors, provided there are no outstanding moratorium debts and the monitor has not yet communicated early termination of the moratorium); s A15 (further extensions, up to a maximum aggregate of 12 months or one year, with the consent of each class of creditors or by court order). Cf. DLA Piper, 'UK Corporate Insolvency And Governance Act: Moratorium' (DLA Piper, September 2020) <https://www.dlapiper.com/en/insights/publications/2020/09/uk-corporate-insolvency-and-governance-bill> accessed 27 April 2026.
[113]
Insolvency Act 1986, ss A20-A23: s A20 (prohibition on commencing or continuing legal proceedings save with court permission; prohibition on enforcement of security save with court or monitor permission); s A21 (prohibition on repossession of goods subject to hire or leasing arrangements); s A22 (prohibition on forfeiture of leases of premises); s A23 (prohibition on further enforcement of security). The moratorium applies to pre-moratorium debts, not to debts incurred during the moratorium ('moratorium debts'), which must be paid with priority.
[114]
Insolvency Act 1986, s A18: "financial services debts" accruing during the moratorium must be paid to prevent the monitor being obliged to bring the moratorium to an end under s A38(1)(b). "Financial services debts" include debts arising from "capital market arrangements" (s A18(3)), claims against credit instruments and analogous claims. Cf. Browne Jacobson, 'Moratoriums' (Browne Jacobson, 2024) <https://www.brownejacobson.com/insights/moratoriums> accessed 27 April 2026; Isca Legal, 'Moratorium under Part A1 of the Insolvency Act 1986' (Isca Legal, 2023) <https://www.iscalegal.co.uk/insights/moratorium-under-part-a1-of-the-insolvency-act-1986> accessed 27 April 2026.
[115]
Re Cimolai SpA (n 10); Re Hong Kong Airlines Ltd [2022] EWHC 2975 (Ch), [2022] 10 WLUK 562 (in which the English court sanctioned a Part 26A restructuring plan commenced in parallel with restructuring proceedings under Hong Kong law). On the coordination of parallel proceedings see Paterson (n 6) 24, citing these cases as demonstrating the "practicability" of parallel proceedings in cross-border restructurings.
[116]
S. Paterson (n 6) 22: '[T]here is also presumably room for a synthetic approach to be developed in appropriate restructuring cases, in which relevant creditors agree to be bound by the discharge notwithstanding that separate proceedings are not opened.' This approach, already adopted in English practice in the context of the so-called "synthetic secondary proceedings" under the EIR (cf. Collins & Aikman Europe SA [2006] EWHC 1343 (Ch)), presupposes the consensual adherence of creditors and is founded on contractual autonomy rather than automatic recognition mechanisms, in the same way as the undertaking mechanism provided for under the EIR and in Art. 54(6) CCII.
[117]
The practicability of the Part 26A restructuring plan as a cross-border restructuring instrument for foreign companies is now well established in English case law. The case of greatest relevance in the Italian context is Re Cimolai SpA [2023] EWHC 2193 (Ch) (Trower J), in which the High Court gave effect to the content of the Italian concordato preventivo by means of a restructuring plan in parallel with the main concordato preventivo proceeding pending before the Tribunal of Trieste, holding the dual-track approach necessary precisely by reason of the rule in Gibbs. On that case see A.A. Terraneo, Primi Arresti della High Court of Justice sul Riconoscimento delle Procedure Concorsuali Europee in Inghilterra. When the Time is of Essence in Dirittodellacrisi.it, 26 October 2023). Among other notable cross-border uses of the same instrument: Re AGPS BondCo plc [2023] EWHC 916 (Ch) (Leech J), concerning the restructuring of German-law-governed bonds issued by a German real estate group through the constitution of an English special-purpose vehicle (issuer substitution), subsequently reversed on appeal for pari passu reasons: [2024] EWCA Civ 24 (CA); Re Project Lietzenburger Straße HoldCo Sàrl [2024] EWHC 468 (Ch), plan sanctioned on 7 March 2024 in relation to a Berlin real estate project, provisional recognition of which was however refused by the Landgericht Frankfurt by order of 22 August 2025 for lack of the collectivity requirement; Re Sino-Ocean Group Holding Ltd [2025] EWHC 205 (Ch), the first use of Part 26A by a Chinese real estate developer, with a parallel scheme sanctioned by the Hong Kong High Court on 19 February 2025; Re Argo Blockchain plc [2025] EWHC 3395 (Ch) (Hildyard J), plan sanctioned on 10 December 2025. For a systematic survey see S. Paterson, A Qualified Defence of the Rule in Gibbs (LSE Law, Society and Economy Working Papers 6/2025) 24.