It became imperative for Quantuma, as the Joint Liquidators of La Perla’s UK entity, to stabilise the position, bring the parties together, and create a decision-making structure across both jurisdictions.
In this article - the second in a series of four - we will explain how we developed that strategy.
Establishing recognition
Following their appointment in the UK, the Quantuma team’s first step was to seek recognition of the English liquidation in Italy. Recognition established the standing of the UK officeholders and created a basis for dialogue with local practitioners. Quantuma achieved that recognition after a series of court filings, hearings and engagement with Italian procedures.
However, recognition did not provide full authority because the Italian Liquidation judgment predated the recognition judgment. Even after recognition, the English officeholders did not gain the ability to manage assets, employees or operations in Italy. Italian proceedings continued in parallel, with local officeholders playing a central role and exerting their jurisdiction everywhere in the world. This reflected the post-Brexit position.
Recognition allowed engagement, but it did not resolve the underlying issues. Decisions still required cooperation between parties operating under different legal frameworks. At this stage, progress depended on maintaining stability while exploring how to create coordination. Legal steps alone would not be enough.
Breaking the deadlock
Early progress was slow, as the separate proceedings advanced independently and communication between officeholders was limited. Authority remained split across jurisdictions, which created practical issues and a complete standstill of any possibility of realising assets unilaterally. Decisions affecting the business could not be aligned. Each step taken in one process had implications for the others.
Unless something seismic could happen, the proceedings risked continuing in a full-blown legal battle between the two Liquidations. This would have reduced the chances of achieving a structured outcome.
Then came the turning point. The court in Bologna decided to intervene. At the request of the Agent appointed by the Joint Liquidators to deal with the Italian aspects, a coordination hearing was convened to bring the parties together. This was the first coordination hearing of its kind between UK and Italian insolvency proceedings after Brexit. The court used its procedural powers to encourage engagement and move the process forward.
The effect was immediate. The negotiations quickly took shape after months of separate discussions. Finally, all parties could focus on solving the practical issues that held up progress, including:
- How a joint sale process could operate across jurisdictions
- How claims in different proceedings would be treated
- How intellectual property and other assets could be managed and transferred
Negotiations continued over several months, with multiple officeholders, advisers and stakeholders involved. The coordination hearing created the conditions for that work to begin. It did not solve the issues on its own, but it allowed the parties to move towards a shared approach.
Developing the cross-border protocol
Informal discussions allowed progress, but they were not enough to manage a case of this scale. It was necessary to create a formal structure.
Work began on a cross-border insolvency protocol to govern cooperation between the proceedings, with drafting involving multiple parties and advisers across jurisdictions. These negotiations continued for several months and were led by the Joint Liquidators’ Agent.
Protocols are recognised tools in cross-border insolvency. They provide a framework for coordination between courts and officeholders operating under different legal systems. In this case, the protocol created a structure that allowed parallel proceedings to function within a single framework.
The agreed protocol addressed several critical areas including:
- Coordination of the sale process across jurisdictions
- Agreement on how claims would be treated and recognised
- Alignment of decision-making between officeholders
- Procedures for sharing information and managing assets
- Mutual recognition of claims across separate estates
All in all, it allowed the parties to plan a coordinated outcome, rather than managing separate processes, thereby reducing much of the uncertainty.
When the protocol was agreed and approved by the relevant authorities in Italy, it marked the first time that a framework of this type had been implemented between UK and Italian insolvency proceedings after Brexit. Cooperation could now become a defined process rather than an informal arrangement, and the La Perla insolvency could move towards its eventual outcomes.
Get the full story
Quantuma has compiled a detailed case study on the La Perla insolvency. In it, you will find out how we solved complex cross-border challenges, saved an iconic fashion brand and set the tone for future cross-border insolvency cases.
Download your copy of the La Perla Whitepaper here.
Here to help
Businesses and advisers facing financial distress that spans more than one jurisdiction should seek specialist advice at an early stage. Early engagement allows more options to be considered and increases the likelihood of preserving value and operational continuity.
Quantuma’s Restructuring & Insolvency team advises companies, lenders and stakeholders on complex cross-border matters. To discuss a situation in confidence or learn more about the firm’s experience in multinational restructurings, please contact Carl Jackson or Andrea Terraneo from Quantuma’s Restructuring & Insolvency team.
