No court order required: the Court of Milan confirms the automatic stay of bankruptcy proceedings under Article 18(4) CCII during negotiated restructuring

by Giorgio Genovese

By order of March 21, 2026, the Court of Milan intervened in the context of a negotiated settlement of the crisis (“Composizione negoziata della crisi d’impresa”, also “CNC”), following an appeal in which the appellant company sought the adoption of precautionary measures pursuant to Article 18 of the Italian Insolvency Law (“Codice della Crisi d’Impresa e dell’Insolvenza”, also “CCII”). 

In particular, among the requests made are:

  • (i) an injunction against the opening of a bankruptcy procedure, with reference to a petition already pending and filed by a creditor;
  • (ii) an injunction against the opening of a bankruptcy procedure with respect to any further petitions that might have been filed during the proceedings;
  • (iii) the adoption of a specific precautionary measure aimed at preventing a creditor from initiating enforcement or precautionary actions against the company’s assets, given that, as of the date the petition was filed, the petitioner company had already availed itself of 240 days of protective measures erga omnes.

With regard to requests (i) and (ii), the Court, after acknowledging the advanced stage of the negotiated settlement, the opinion issued by the Expert, and the pending deadlines of the restructuring process, directly addresses the issue of the injunction against bankruptcy procedures, clarifying that this effect does not require a specific judicial ruling. 

The Judge observes, in fact, that “this is an effect that derives directly from the provision of Article 18, paragraph 4, of the CCII, pursuant to which, from the publication of the petition under Article 18, paragraph 1, and until the conclusion of the negotiated settlement of the crisis, no judgment may be issued to open a bankruptcy procedure or to declare a state of insolvency; an effect that operates ex lege and therefore does not require any specific confirmation by the judicial authority” (emphasis added).

On this point, the ruling is significant because it clearly states a fact that, in practice, is often the subject of specific motions and requests for ad hoc measures, given the actions frequently taken by creditors: on the contrary, the suspension of the possibility of initiating a bankruptcy procedure is not left to the judge’s discretionary assessment, but constitutes a protective measure typical of negotiated settlement, the duration of which extends from the publication in the Business Register of the application pursuant to Article 18(1) of the CCII until the conclusion of the negotiated settlement, thus well beyond 240 days and up to a theoretical maximum of 360 days. This is provided that the “ordinary” protective measures have not been revoked by the judicial authority, while the fact that such measures have expired does not preclude the application of Article 18(4) of the CCII.

The party’s motion seeking an injunction is therefore brought back within its proper scope by the Court, clarifying that the requested preventive effect is already fully provided for by the legal system until the conclusion of the Expert’s mandate.

Of particular importance, then, is the coordination between Article 18(4), Article 40(10), and Article 41 of the CCII.

On the one hand, where protective measures have been requested and obtained within the framework of a negotiated settlement (CNC), the order opening a bankruptcy procedure cannot be issued until the conclusion of negotiations or the dismissal of the negotiated settlement. Since the prohibition under Article 18(4) of the CCII concerns the issuance of the order, the proceedings may remain pending but cannot result in the opening of the proceedings.

On the other hand, it may happen that the Court sets the first hearing under Article 41 of the CCII during the negotiated settlement. This hearing is, as a general rule, the deadline by which the debtor must file a request to access a crisis resolution tool in the already pending proceeding; however, the last sentence of Article 40, paragraph 10, of the CCII provides an exception to this rule when the tool is proposed following the outcome of the negotiated settlement, within 60 days of the Expert’s notification.

In other words, pending proceedings for the opening of a bankruptcy procedure, an entrepreneur who emerges from a restructuring process such as negotiated settlement is still entitled to file an appeal under Article 40 of the CCII within 60 days following the communication of the Expert’s final report pursuant to Article 17, paragraph 8, of the CCII.

This approach is, moreover, consistent with the underlying rationale of the instrument provided for in Articles 12 et seq. of the Corporate Crisis Code, as well as with the underlying rationale of the entire Corporate Crisis Code, since the Code aims to prioritize negotiated solutions and measures to overcome a state of crisis or reversible insolvency in general, rather than removing from the market entities that could potentially still contribute to the economy.

As for the additional request for a preliminary injunction indicated under (iii), the Court, having examined in detail the Company’s application aimed at preventing enforcement or precautionary measures against its assets, noted that this measure addresses a distinct need for protection, linked to the necessity of preserving the outcome of ongoing negotiations at an advanced stage of the negotiated settlement. 

The granting of this measure, which is limited in time and subjectively determined, is justified in light of the circumstances of the specific case and the content of the expert’s opinion.

The ruling is particularly significant for the clarity with which the Court of Milan affirms that Article 18, paragraph 4, of the CCII produces an automatic inhibitory effect with respect to any petition to open a bankruptcy procedure filed while the negotiated settlement is pending. 

This effect - the judge clarified - is not subject to the discretionary assessment of the judicial authority, nor does it require an ad hoc ruling: it is already fully provided for by law solely by virtue of the fact that the restructuring process is pending.