Borletti Group's new offer to acquire insolvent German retailer Karstadt includes a €100 million investment and wouldn't separate the department chain into several units, as proposed by investor Nicholas Berggruen in June, the Italian group's head, Maurizio Borletti, said Wednesday, Dow Jones Daily Bankruptcy Review reported. Berggruen won a bid to acquire Karstadt in June, but the deal is contingent on reaching agreements on rental and other conditions with Karstadt's creditors. The final agreement has been held up as Berggruen and creditors discuss formal details ahead of an Aug.

The two founders of Italy's debt-laden Mariella Burani Fashion Group have been arrested as part of an inquiry into the bankruptcy of the luxury goods maker, a judicial source said on Wednesday. Former Chairman Walter Burani was put under house arrest by Milan judges investigating the bankruptcy of Mariella Burani Family Holding and Mariella Burani Fashion Group, the source said. His son Giovanni Burani was being held in jail awaiting questioning, the source said. Mariella Burani Fashion Group (was not immediately available for comment.

Italy’s Senate is on Thursday expected to approve the centre-right government’s controversial €25bn austerity package, with Silvio Berlusconi resorting to a vote of confidence to ram through his cuts in the face of considerable dissent from within his own coalition, the Financial Times reported. The unpopular package is then expected to be taken to the lower house for final approval, again in a vote of confidence, by the end of the month.

The deadline for bids for Italian fashion house Gianfranco Ferre, one of Milan's top designer names, was extended to Aug. 2 to give latecomer foreign bidders time to prepare an offer, a source close to the sale said, Reuters reported. A call for bids for the fashion house, known for its "architectural" style in suits, was set to expire on Tuesday. In a statement on Monday, the special commissioners running parent company IT Holding, which went into administration in February 2009 after it ran out of cash, said the deadline for Ferre's auction was postponed to Aug.

Italy’s debt, the highest in the euro region last year, remains a “potential time bomb” and the country is at risk of default unless it boosts productivity, Capital Economics said, Bloomberg Businessweek reported. “We think the size of the government’s debts will eventually prompt the markets to turn their sights on Italy,” Capital Markets Managing Director Roger Bootle and chief European economist Jonathan Loynes said in a report today.

The auction of Italian fashion house Gianfranco Ferre, one of Milan's top designer names, was launched on Wednesday by the special commissioners running parent company IT Holding. A call for bids comes the day before the third anniversary of the death of Gianfranco Ferre, known for his signature "architectural" style in suits and jackets and his trademark white shirts. IT Holding went into administration in February 2009 after running out of cash. In a notice published in newspapers, the three overseers set a July 6 deadline to submit binding offers for Ferre and an Aug.

Italian Premier Silvio Berlusconi said Wednesday that €24 billion (nearly $30 billion) in budget cuts aimed largely at its bloated bureaucracy are essential to restore confidence in the euro and to stop Italy living beyond its means, The Associated Press reported. Berlusconi's government bowed to market concerns about his country's high debt load and bloated public sector, springing the cuts on an unsuspecting public just weeks after ruling out painful measures. But Berlusconi said "this crisis is like no other," mandating significant and coordinated austerity measures.

The Italian government is asking citizens to make sacrifices to help get public finances in order and protect the country from the sort of market speculation that pushed Greece to the brink of bankruptcy, The Associated Press reported. The Cabinet meets later Tuesday in Rome to approve €24 billion ($30 billion) in hotly contested spending cuts in 2011-2012 which reportedly include pay freezes for most public workers - and cuts for those highest paid - and may see trims to the nation's revered health system.

The politician at the centre of Europe’s first big criminal trial of the credit crisis has urged banks to stop putting short-term gain ahead of long-term relationships with their customers. Ahead of Thursday’s opening of a trial against JPMorgan Chase, UBS, Deutsche Bank and Depfa, Letizia Moratti, mayor of Milan, rejected suggestions that Italy’s financial centre should have been a more sophisticated investor when dealing with derivatives, saying it had been duped.

Chrysler expects to report its first substantial monthly sales increase in the U.S. in more than two years Monday, but CEO Sergio Marchionne is shifting attention to Fiat, where problems are deepening, the Detroit Free Press reported. The European half of this new alliance is facing change nearly as wrenching as Chrysler's government-backed bankruptcy. Car sales in Italy are expected to fall about 15% this year because the government stopped paying consumers to replace dilapidated old vehicles.