Discharge from Debt: The Court of Cassation Clarifies the Applicable Regime Between the Bankruptcy Law and the Code of Business Crisis (Order No. 14835/2025)

In the landscape of Italian insolvency law, the transition from the historical Bankruptcy Law (Royal Decree No. 267/1942) to the more recent Code of Business Crisis and Insolvency (Legislative Decree No. 14/2019, which entered into force on July 15, 2022) has generated considerable application uncertainties, especially concerning proceedings initiated under the old legislation but whose effects continue over time. One of the most debated issues relates to the institution of discharge from debt, i.e., the debtor's release from unsatisfied residual debts. On this crucial point, the Court of Cassation, with Order No. 14835 of June 3, 2025, has provided a clarification of fundamental importance, precisely delineating the boundary between the two legal frameworks.

The Regulatory Context: Old and New Rules for Discharge from Debt

Discharge from debt represents a cornerstone principle of modern insolvency law, aimed at granting an honest debtor a "second chance," allowing them to start anew, free from past burdens. However, the regulatory change has raised questions about the application of the new provisions of the Code of Crisis (CCII) to bankruptcies declared before its entry into force. The Court of Cassation's Order, with D. G. as rapporteur and C. M. as president, addressed precisely this issue, ruling on the appeal filed by T. against F.

In matters of discharge from debt, an application filed after the entry into force of the Code of Business Crisis and Insolvency (July 15, 2022) by a subject declared bankrupt previously remains governed by the bankruptcy law, as Article 390 of the CCII does not mention discharge procedures, while the provisions of Article 142, paragraph 1, of the bankruptcy law and Article 278 of the CCII, reserving the benefit respectively to the "bankrupt" and the "debtor of unsatisfied claims within a judicial liquidation or controlled liquidation procedure," presuppose the opening and conduct of the respective procedure according to the substantive and procedural rules specific to their respective reference system.

This statement is of extraordinary importance. Essentially, the Supreme Court states that even if the request for discharge from debt is filed after the entry into force of the CCII (i.e., after July 15, 2022), if the subject's bankruptcy was declared before that date, the applicable legislation remains that of the old Bankruptcy Law. The reason lies in the fact that Article 390 of the CCII, which governs transitional provisions, makes no specific reference to discharge procedures. Furthermore, Articles 142, paragraph 1, of the Bankruptcy Law and 278 of the CCII refer respectively to the "bankrupt" and the "debtor of unsatisfied claims within a judicial liquidation or controlled liquidation procedure." This means that the benefit of discharge from debt is intrinsically linked to the insolvency proceeding in which it is included, and such proceeding must be governed by the substantive and procedural rules specific to the reference system in which it was opened. In other words, it is the nature and the opening date of the proceeding that determine the applicable law, not the date of the individual discharge request.

The Court of Cassation's Decision: A Crucial Clarification for Legal Certainty

Order No. 14835/2025 rejects the appeal, upholding the decision of the Court of Appeal of Bologna of July 24, 2023. The Court of Cassation, with this ruling, establishes a fundamental principle of transitional law, emphasizing that the regulations on discharge from debt cannot be applied retroactively or in a "mixed" manner to proceedings already initiated. The reasoning is based on the need to ensure the coherence and integrity of the legal system that governed the entire insolvency proceeding. The key points of the decision are:

• The discharge from debt regime is strictly connected to the insolvency proceeding (bankruptcy or judicial liquidation) in which it is included.
• Article 390 of the Code of Business Crisis and Insolvency does not include specific transitional provisions for discharge from debt, implying the application of the tempus regit actum principle to the entire proceeding.
• The terminological distinction between "bankrupt" (Bankruptcy Law) and "debtor of unsatisfied claims within a judicial liquidation or controlled liquidation procedure" (CCII) highlights the non-interchangeability of the rules.

This interpretation aligns with the established orientation of the Supreme Court on intertemporal law, which tends to preserve the law in force at the time the proceeding was opened, except for specific transitional provisions, which in this case are absent for discharge from debt. The United Sections, with judgment No. 8504 of 2021, had already provided important guidance on the succession of laws over time in the insolvency field, leaning towards a strict application of the principle of non-retroactivity for procedural and substantive rules.

Practical Implications and Future Orientations

The Court of Cassation's ruling is of considerable relevance for all parties involved in bankruptcy proceedings initiated before July 15, 2022. It provides legal certainty, clarifying that for these cases, the provisions of the Bankruptcy Law will apply regarding discharge from debt. This means that the requirements, conditions, and effects of discharge from debt will be those provided for by the previous legislation, and not by the new, and sometimes more flexible, rules of the Code of Crisis.

For debtors, this implies the need for a careful assessment of their legal position and the conditions for accessing discharge from debt according to the law applicable to their case. For creditors, the decision confirms the reference regulatory framework for managing claims within ongoing bankruptcy proceedings. Order No. 14835/2025 reiterates the importance of a detailed analysis of the regulatory and temporal context of each individual proceeding, preventing extensive interpretations that could compromise the stability of the system.

Conclusions

Order No. 14835 of June 3, 2025, from the Court of Cassation, represents a beacon in the complex transition from the old to the new insolvency law. With the clarity that distinguishes it, the Supreme Court has dispelled doubts about the applicability of discharge from debt rules, reiterating that the law governing the entire insolvency proceeding is the one in force at the time of its opening. This principle not only protects legal certainty but also ensures the coherence of the legal system in a sector as sensitive as business crises. It is essential for anyone facing situations of insolvency or bankruptcy to seek specialized legal advice to navigate the regulations correctly and ensure the best protection of their interests.