This illustrative scenario examines how a mid-sized Italian corporate group might approach a director liability review in the context of Directive (EU) 2026/799, which entered into force on 21 April 2026 and must be transposed into Italian law by 22 January 2029. During the transposition period, Italy's Code of Business Crisis and Insolvency (CCII) continues to govern insolvency proceedings, director duties, and avoidance actions – meaning that groups operating today face a dual horizon of current national obligations and incoming harmonised standards. Understanding both layers is essential for any board seeking to manage liability exposure proactively.
The Illustrative Scenario: Client Profile and Challenge
This is an illustrative scenario based on patterns typical of matters encountered in practice. No specific client, amount, or outcome is presented as real.
The group in this scenario is a family-controlled Italian holding structure comprising a parent S.r.l. and three operating subsidiaries active in manufacturing and distribution. The holding and its subsidiaries are registered in the Registro delle Imprese and have a combined management board of eight directors, several of whom hold cross-appointments across group entities. The group began experiencing financial stress following a contraction in export demand, leading to sustained cash shortfalls and mounting trade creditor arrears.
The core challenge facing the directors was threefold. First, they needed clarity on when – under the CCII as it currently stands – the obligation to file for insolvency proceedings attaches and what personal liability flows from any delay. Second, they needed to understand how the incoming Directive 2026/799 would modify or intensify that duty once transposed. Third, given the group structure, they required an assessment of whether avoidance actions brought in any future insolvency could be directed at transactions concluded between group entities in the preceding period.
Strategy and Rationale
The engagement was structured in three phases: a liability mapping exercise, a transaction review, and the preparation of a governance protocol to document board decision-making going forward. The rationale for this sequencing was straightforward – any engagement with a restructuring adviser, creditors' committee, or court would be materially influenced by the quality of the contemporaneous record kept by the directors.
On liability mapping, the review focused on the duty of care and the duty to act in the interests of creditors once the group reached the vicinity of insolvency – a concept already embedded in Italian case law developed under the CCII and reinforced by decisions of the Corte di Cassazione. The incoming Directive 2026/799 addresses directors' duty to file as one of its five harmonisation pillars, alongside avoidance actions, pre-pack proceedings, creditors' committees, and asset tracing. Because transposition is pending, the precise national implementation rules remain subject to the Italian legislature's choices; however, the direction of travel is clear, and planning ahead of the 22 January 2029 deadline is prudent rather than premature.
The transaction review concentrated on intra-group flows – management fees, upstream loans, and cash-pool arrangements – that could be characterised as value transfers at undervalue if insolvency proceedings were subsequently opened. Under the CCII, avoidance actions can be pursued by the insolvency office-holder, and the creditors' committee has standing to request such actions in certain circumstances. The Directive 2026/799 harmonises minimum standards for avoidance actions across Member States, which may ultimately affect how cross-border aspects of such claims are handled once transposed.
For the governance protocol, the board adopted a structured monthly solvency-monitoring framework with documented board minutes, supported by independent financial reporting. This was designed both to satisfy existing CCII obligations and to anticipate the more explicit record-keeping expectations likely to accompany transposition of the Directive.
If your group faces comparable questions about director exposure or intra-group transaction risk, our team is available to discuss the position in detail. Please write to info@ferrazwhitmore.com or visit our contacts page.
Key Milestones in the Review
- Initial liability assessment: Directors' individual positions mapped against CCII obligations, with particular attention to cross-appointed directors whose duties run to multiple group entities simultaneously.
- Directive gap analysis: The five pillars of Directive 2026/799 – avoidance actions, pre-pack proceedings, directors' duty to file, creditors' committees, and asset tracing – assessed against existing CCII provisions to identify where Italian law already meets the incoming standard and where gaps exist pending transposition.
- Transaction audit: Intra-group transactions for the look-back period reviewed for potential avoidance action exposure; documentation remediated where deficiencies were identified.
- Pre-pack feasibility assessment: Given that Directive 2026/799 includes pre-pack proceedings as a harmonisation pillar, an early-stage assessment was conducted of whether a pre-packaged sale structure could be a viable resolution pathway if financial stress deepened, noting that Italian implementing rules remain pending.
- Board protocol implemented: Solvency monitoring and decision-recording framework adopted, with legal review scheduled at each quarter.
Complications Encountered
Several complications arose that are instructive for other groups in comparable positions.
The cross-appointment issue proved more complex than initially anticipated. Where the same individual sits on the board of both a parent and a subsidiary, their duties in the vicinity of insolvency may pull in different directions – the subsidiary's creditors may have interests adverse to those of the group holding company. This tension is not resolved by the CCII in explicit terms and will need to be addressed in national transposition measures implementing the Directive's directors' duty pillar. Until those measures are in place, directors must navigate this area by reference to existing case law, including guidance from the Corte di Cassazione on the separation of group and entity-level interests.
The asset tracing pillar of Directive 2026/799 raised a specific concern regarding a subsidiary's assets that had been pledged to a related-party lender. The enforceability of that security, and its vulnerability to an avoidance action, required analysis both under current CCII provisions and in light of the harmonised avoidance action framework that will apply post-transposition. The conclusion was that early voluntary corrective steps – restructuring the security on arm's-length terms with proper documentation – were preferable to leaving the position to be tested in proceedings. For deeper background on how harmonised avoidance action standards are developing across the EU, see our analysis at Insolvency Harmonisation and Avoidance Actions in the EU.
A further complication arose from a decreto ingiuntivo obtained by a trade creditor against one of the subsidiaries during the review period. This created immediate enforcement pressure that had to be managed in parallel with the longer-term liability review, illustrating the importance of coordinating transactional and contentious workstreams. Our corporate disputes practice in Italy has experience in precisely this kind of parallel management; details are available on our corporate disputes service page.
Outcome Category
This scenario is illustrative, and no specific outcome is presented as real. However, engagements of this type typically fall into one of three outcome categories: the group stabilises through operational improvements and the restructured governance framework reduces director liability exposure materially; the group pursues a consensual restructuring – potentially including pre-pack mechanics once Italian implementing rules are in place – that addresses creditor claims with documented board oversight throughout; or, in a minority of cases, formal insolvency proceedings are unavoidable, but the work done in a proactive liability review significantly improves the directors' position with respect to any claims brought by the insolvency office-holder or the creditors' committee. In all three categories, the quality of prior preparation is the determining variable.
Three Transferable Lessons
1. Start the liability review before the crisis becomes acute. The CCII already imposes obligations that crystallise at a relatively early stage of financial distress. Directive 2026/799 is expected to sharpen the directors' duty to file further once transposed. A review conducted while the group retains operational and financial flexibility produces more options than one conducted under creditor pressure or after a decreto ingiuntivo has been obtained.
2. Treat the Directive's five pillars as a planning framework, not a future compliance exercise. Even though transposition is not required until 22 January 2029, the Directive's pillars – avoidance actions, pre-pack proceedings, directors' duty to file, creditors' committees, and asset tracing – identify the areas that any insolvency court or office-holder in the EU will scrutinise with increasing consistency. Structuring intra-group transactions and documenting board decisions by reference to these pillars now reduces retrospective vulnerability later.
3. Cross-appointments require individualised advice. Directors who sit across multiple group entities cannot rely on a single group-level review. Each entity's creditor profile, solvency position, and exposure to avoidance action claims must be assessed separately. This is particularly relevant for Italian groups where S.r.l. subsidiaries may have different creditor compositions and different exposure timelines. Regulators including CONSOB, where listed entities are involved, add a further layer of obligation that must be integrated into the overall analysis. Where debt recovery questions also arise across the group, our Italy debt recovery practice can assist; see our debt recovery service for further information.
Looking Ahead: the Transposition Window
Italy has until 22 January 2029 to transpose Directive 2026/799. During this period, the CCII remains the governing framework for insolvency proceedings, director obligations, and avoidance actions. The transposition process is likely to require amendments to the CCII and associated implementing legislation, and the precise scope of those amendments – particularly regarding directors' duty to file and the detailed mechanics of harmonised pre-pack proceedings – will only become clear as legislative drafts emerge. Groups should monitor this process and revisit their internal governance frameworks as national implementing rules are published.
For Italian groups and their foreign investors, the practical implication is that the period between now and transposition is an opportunity – not a deferral. Aligning current practice with the direction set by the Directive reduces the compliance burden at transposition and, more importantly, reduces director liability exposure in any insolvency proceedings opened under either the current or the future framework.
If you would like to discuss how the issues raised in this scenario apply to your group's specific circumstances, our team in Italy and across the Ferraz & Whitmore network is available to assist. Please contact us at info@ferrazwhitmore.com or through our contacts page.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.