Court of Brescia: 60-day filing extension requires continuity between negotiated settlement and subsequent restructuring proceedings

The issue

When judicial liquidation proceedings have already been initiated at the request of a creditor, can a debtor still file a late application to access another restructuring or insolvency procedure following the conclusion of a negotiated settlement of its financial distress?

According to the Court of Brescia, the answer is not automatically.

The 60-day grace period available after the conclusion of a negotiated settlement can only be relied upon where the subsequent restructuring or insolvency procedure is substantively connected to the negotiations that have just ended. If the new application is based on a different restructuring strategy and on assumptions unrelated to those considered during the negotiated settlement, the debtor cannot benefit from the exception and may lose the opportunity to file the application.

Background

On October 20, 2025, a creditor petitioned the Court for the opening of judicial liquidation proceedings against a company. The Court subsequently scheduled the first hearing for November 26, 2025.

A similar petition was filed by the Public Prosecutor on November 4, 2025.

On November 25, 2025, one day before the scheduled hearing, the debtor informed the Court that it had applied for protective measures in connection with ongoing negotiated settlement proceedings, under Article 19 of the Italian Code of Business Crisis and Insolvency (the Codice della crisi d'impresa e dell'insolvenza, or CCII).

The debtor therefore requested that the liquidation hearing be postponed. The hearing was subsequently adjourned several times while the protective measures remained in force and was ultimately scheduled for July 22, 2026.

The negotiated settlement proceedings were subsequently terminated at the debtor's request on July 3, 2026. Following the withdrawal, the Public Prosecutor asked the Court to bring the hearing forward, and the hearing was rescheduled for July 9, 2026.

On July 8, the debtor informed the Court that it had also filed an application under Articles 40 and 44 of the CCII, seeking access to a restructuring procedure. The debtor argued that the application was admissible despite having been filed after the ordinary deadline because it fell within the exception provided for by Article 40(10) of the CCII.

The Court's decision

The Court of Brescia rejected the debtor's application as inadmissible, holding that it had been filed after the deadline established by Article 40(10) of the CCII.

Under that provision, where proceedings for the opening of judicial liquidation have already been initiated by a party other than the debtor, an application to access a restructuring or insolvency procedure must generally be filed no later than the first hearing scheduled in the liquidation proceedings.

The provision nevertheless establishes an exception where the application follows the conclusion of a negotiated settlement procedure. In such circumstances, the debtor may benefit from a 60-day period running from the notification of the expert's final report under Article 17(8) of the CCII.

The debtor argued that this exception applied because it had received the expert's final report on July 6, 2026.

The Court disagreed.

The exception is not automatic

Referring to the explanatory report accompanying Legislative Decree No. 83/2022, the Court explained that the purpose of the exception is to encourage a debtor that has genuinely engaged in a negotiated settlement to carry the outcome of those negotiations into an appropriate restructuring solution.

In other words, the provision is intended to give the debtor additional time where the restructuring or insolvency procedure subsequently pursued represents the continuation or implementation of the solutions explored during the negotiated settlement.

The Court therefore held that the subsequent procedure must have a causal connection with the negotiations that have taken place. Simply having participated in a negotiated settlement is not sufficient.

The Court also referred to a decision of the Italian Supreme Court (Section I, May 13, 2026, No. 13997), which similarly held that the purpose of the provision is not to reward the debtor merely for having participated in a negotiated settlement. Rather, the additional period is intended to allow the solutions developed through that process to lead into another procedure within the framework established by Article 40 of the CCII.

No continuity between the two restructuring plans

The Court then examined whether such a connection existed in the case at hand.

It found that it did not.

In particular, the restructuring strategy developed during the negotiated settlement was based on indirect business continuity, whereas the proposal subsequently submitted by the debtor was based on direct business continuity.

The difference was considered significant because the two proposals were based on different assumptions and restructuring strategies.

Moreover, the debtor's own counsel had acknowledged at the hearing that the restructuring procedure subsequently proposed was based on new assumptions and prospects that were unrelated to those examined during the negotiated settlement.

On this basis, the Court concluded that there was no substantive continuity or causal connection between the negotiated settlement and the restructuring procedure subsequently pursued.

The debtor could therefore not rely on the 60-day exception under Article 40(10) of the CCII. Its application was declared inadmissible and the Court ordered the opening of judicial liquidation proceedings.

Key takeaways

The decision provides an important clarification for companies facing financial distress and their advisers.

The 60-day grace period following a negotiated settlement does not apply automatically simply because the debtor has participated in the procedure. To benefit from the exception, the restructuring or insolvency procedure subsequently proposed must represent a natural continuation of the negotiations and of the solutions explored during that process.

This means that practitioners should pay particular attention to the consistency between the restructuring strategy developed during the negotiated settlement and the proposal subsequently submitted to the court.

Where the new proposal is instead based on materially different assumptions, a different restructuring strategy or circumstances that were not considered during the negotiations, the debtor may be unable to rely on the exception. As a result, the application may be considered out of time, potentially leading to the opening of judicial liquidation proceedings.

The decision therefore highlights the importance of ensuring continuity between the negotiated settlement and any subsequent restructuring application, particularly where liquidation proceedings are already pending.