The Reorganization of the Italian Distressed Firms: A Dynamic Approach to Assess the Conditions Leading to Resilience or Failure

This chapter delves into the reorganization of distressed firms in Italy, focusing on the conditions that lead to resilience or failure. It examines the roles of financial indicators like the Z-Score and leverage, governance structures, and court oversight in the reorganization process. The study employs a sequential logit model to analyze the determinants of financial distress resolution at three critical stages: court admission, creditors' approval, and court homologation. The findings reveal that factors such as the Z-Score and leverage significantly influence creditor approval, while the presence of independent directors and management control impact the likelihood of admission and homologation. The study also highlights the importance of court monitoring and the role of fresh capital injections in the reorganization process. By adopting a dynamic perspective, the research provides valuable insights into the complex interplay of factors that determine the success or failure of preventive agreements, offering practical implications for stakeholders involved in corporate crisis resolution.