The real estate cycle, including that of single businesses, does not enjoy a linear trend by definition. In manufacturing and commercial activity, pick-ups and slow-downs follow one after the other and are determined not only by the approach taken by individual companies and their business strategies but also by the macroeconomic situation or changes in the competitive scenario. The Italian and European legislator has long taken an innovative approach to contextualizing business crises, giving preference to prevention rather than cure: evidence of this is the new Business Crisis and Insolvency Code (Legislative Decree no. 14/2019) (the “Business Crisis Code”), which became effective on 15 July of this year. The text envisages a series of alarm bells and periodic controls aiming to avoid the cessation of operations and additionally provides for mediation procedures. But the legislator’s intention is certainly not to extend the deadlock. Just the opposite. Brussels (and Rome) have drafted the details with the clear intention of assisting the recovery of essentially healthy companies while at the same time encouraging the orderly liquidation of the others. The general view is to foster the competitiveness of the economic system, channeling the energy of the players involved into genuinely profitable activities – and it’s the relation between items in the financial statements, rather than mere turnover or even profits, that show this -; there has also been the desire to relieve the courts of at least part of the burden to ensure that uniform, clear-cut and rapid judgements are achieved.

The legislation overcomes the old approach which sees “failure” as a disgrace: the objective is clearly to encourage honest entrepreneurs acting in good faith and relieved of past burdens to return to the track.

A new paradigm for judicial sales

In light of this premise, it goes without saying that swift and efficient judicial sales procedures are part of the virtuous process that can lead to an orderly liquidation, the settlement of debts and a new start.

But while the Business Crisis Code is a recent tool, judicial sales have still not fully taken advantage of the possibilities provided by technology or, and perhaps above all, its dissemination among the public.

The Public Sales Portal (Portale delle Vendite Pubbliche - Pvp) is the website set up by the Ministry of Justice on which the sale of all assets deriving from enforcement and insolvency procedures must be publicized, as well as those arriving from other procedures for which publicizing is required by law.

With the recent introduction of the Business Crisis Code the Pvp has become a leading player given that expert appraisals must be prepared on the basis of ICT-based models published on this portal, on which moreover requests for surveys and inspections must be made. Not only that, but sales of all moveable and immoveable assets must be carried out, and all purchase offers made, through the Pvp, and these must then be sent to the digital sales operators. There is also the legal requirement for the sale of all assets (moveable and immoveable) arising from insolvency and enforcement procedures to be publicized on the portal.

Judicial sales: figures from the Real Estate Observatory edited by Abilio and neprix

Judicial sales began rising again in the fourth quarter of 2021 after two years of significant contraction arising mainly from the repercussions of the Covid 19 pandemic on the activities of the Italian courts. This information is included in the first edition of the Real Estate Observatory edited by Abilio, the illimity company specializing in the sale of real estate and operating assets, in conjunction with neprix, the Group’s servicer. According to the report, there were 107 thousand sales attempts in the first half of 2022 for a total auction starting price of ca. 18 billion euro: figures not so far from those for the same period in 2019 (114 thousand sales attempts, a total auction starting price of 18 billion euro). As a basis for comparison, sales attempts in the first half of 2020 and 2021 suffered a considerable contraction to stand at 64 thousand (auction starting price of around 10 billion euro) and 94 thousand (auction starting price of around 16 billion euro) respectively.

Enforcement and insolvency procedures are proceeding at different paces. More specifically, in the same period (the first half of 2022) growth regarded mainly sales attempts underlying enforcement procedures (81 thousand, in line with the 83 thousand in 2019), while insolvency procedures found it hard to equal the volumes of three years ago (26 thousand against 31 thousand). This latter figure was, however, affected by the uncertainty in the legislative situation, with the introduction of the Business Crisis Code being deferred to 15 July 2022.

In any case, and despite everything, the figures show that the perceptible rise in the number of sales attempts and the auction starting price can be said to be generalized and evenly spread across the country, albeit with a greater impact occurring in the regions in the center, the south and the islands compared to those in the north of the country.

It should be stressed, the authors say, that there is no shortage of consequences arriving from the two years of the pandemic: among other things the gradual aging of the real estate “stock” underlying judicial sales. The reports notes that 43% of attempted insolvency sales (36% for enforcement) taking place in the first half of 2022 involve procedures filed at least six years ago; a figure that rises to 68% (for attempted insolvency sales) and 66% (for enforcement) if procedures filed at least four years ago are taken into consideration.

The importance of changing approach

The figures show that a change of pace is needed which will enable “the backlog to be worked off” and allow us to set our sights decisively on a future where judicial sales are more fluid.

There are already a number of positive signs. The awareness is growing in many courts of the importance of accompanying an exclusive legal approach, focusing on compliance with legal provisions and few publicizing formalities, with a commercial approach that maximizes sales through a full interrogation of the market, involving specialists, an aspect already introduced by the 2006 reform of the bankruptcy law.

By their nature specialists are capable of maximizing the population of potential purchasers but also the results of the liquidation, with an increase in realizable values and a reduction in the timescale for completing judicial sales. Whereas in 2019 courts were supported by specialists in 27% of attempted insolvency sales, this figure had risen to 39% by June 2022 and, according to the authors of the Real Estate Observatory, it suggests that there will be a similar trend in future years. On the attempted enforcement sales front, those using a digital approach rose from 33% in March 2019 to 74% in June 2022: this case too suggests that the trend will continue. It appears that the need to facilitate social distancing was a decisive factor in the increased resort to technology; with the initial hurdle overcome, the road now appears to be all downhill. ore ricorso alla tecnologia; superata la barriera iniziale, la strada appare in discesa.

The Real Estate Observatory’s report can be downloaded from the website https://oi.abilio.com/