- Proposal to create record is inspired by service in U.S.
- Legislation will be part of package for cabinet next week
Italy’s government plans to create a service to enable investors to better price bad loans as part of revamp of bankruptcy procedures to help cut the 360 billion euros ($406 billion) of soured debt on lenders’ books, people with knowledge of the matter said.
The service, inspired by the U.S. Public Access to Court Electronic Records, would allow individuals to search filings on bankruptcy and insolvency proceedings to assess the quality of the debt, according to the people, who asked not to be identified because the proposal is still being drafted. The plans could be submitted for approval at a cabinet meeting as early as Monday with other measures to speed up debt collection.
The government led by Prime Minister Matteo Renzi has been taking steps to ease a debt burden at Italian banks that has restrained lending and hampered the country’s recovery from recession. Earlier this week, the government spurred the creation of a 5 billion-euro bank rescue fund to backstop debt sales and capital increases needed by a number of domestic lenders.
Under the proposed legislation, there will be a database for the general public and one for professionals in the bad-loan market, one of the people said. The service will allow funds, investment banks, financial services and law firms to obtain case and docket information on ongoing proceedings involving soured loans, the person said.
“The approval of such a measure will boost both transparency and the level of information on loans, reducing the risks related to their pricing,” said Lorenzo Stanghellini, a law professor at the University of Florence, who contributed to the drafting of the proposed database plan.
In the U.S., filings in federal appeals courts, district courts and bankruptcy courts are available on the judiciary Internet service which charges fees to users.