| 24 June 2023 Evolution in Corporate Restructuring Corporate restructuring has lately been evolving, leading to the dissolution of the bank-centric system, also dependent on the change of the actors involved.For regulatory aspects we are witnessing the transfer of stage 3 credits and the management of stage 2 credits. Utp’s management is characterized by the transfer of bank credit, the interruption of credit lines and the absence of new finance.Future development could focus on credits in stage 2, characterized by an information asymmetry in favor of the borrower. The entrepreneur could use this in his own favor so as to maximize his profit and that of the company, to select his own restructuring partner and to hinder the banks from making such a choice. The 2 key factors are governance and performance. Anticipating the choice of a partner allows the latter to purchase at a lower price from banks, and this advantage could be shared with the owner of the company. However, the entrepreneur has to give up on part of the role he’d play in managing the corporate governance profile of his enterprise. |
PUBLICATIONS AND NEWS
| 10 May 2023 Franco Carlo Papa will participate at the conference: “The recovery plan in the context of the crisis code” organized by the Catholic University of the Sacred Heart, in memory of prof. Martinelli. |
| 29 April 2023 In an interview with BeBeez magazine, Franco Carlo Papa presents his thoughts one year after the entry into force of the Crisis Code,: In an interview with BeBeez magazine, Franco Carlo Papa presents his thoughts one year after the entry into force of the Crisis Code. In particular, he highlights how the “Negotiated Composition”, which is not currently enjoying great success, could prove to be the access to traditional crisis resolution procedures, as the role of supervisory bodies has been accentuated, with greater impact on SMEs. He also describes his experience as an Expert in the “Negotiated Composition” of a software company and how this procedure proved to be a tool for the emergence of the crisis, albeit not too anticipated, which led to reflections on the method to get out of the crisis. |
| 27 April 2023 Franco Carlo Papa (Studio Papa) provided a comfort opinion in support of the industrial and financial maneuver related to Inseme: a company active in the bovine genetics sector. The company’s debt, amounting to approximately € 13 million, was restructured as part of a complex investment transaction that included an American company as sole shareholder, the renegotiation of debts with suppliers and banks and the issue of a letter of credit by Bank of America. K&L Gates advised Banco BPM, BPER Banca, and Intesa Sanpaolo, while CMS and R&S Advisory provided support, respectively to Inseme and its American investor. |
| 9 November 2022 The point on “Patrimonio Rilancio” The “Patrimonio Rilancio” project, an extraordinary EUR 40 billion fund envisaged by the MEF in the post-pandemic period to support larger Italian companies who report revenues of more than EUR 50 million, is now getting into full swing, with investments in the first management vehicles selected under the National Fund for Enterprise Restructuring (NFER). We talk about this with Franco Carlo Papa, one of the independent experts accredited at the Ministry of the Treasury for the asseveration of the operations of the National Fund for Restructuring, which foresees interesting developments for the specialised private equity industry. TMA: How is this initiative articulated? Papa: In detail, the actions are articulated around a National Fund for Temporary Support (NFTS) for interventions in healthy companies that have been impacted by Covid-19. These measures are part of the temporary framework through loans of various types and capital increases. This is flanked by a second initiative known as the Free Market, which envisages the involvement of other market investors and is articulated in two separate instruments: the National Strategic Fund (NSF), which makes both direct and indirect investments in healthy companies with solid growth prospects. The company is not in difficulty, and the investment by the Fund takes place, together with co-investors, through capital increases and convertible bonds. Finally, there is the National Fund for Enterprise Restructuring, dedicated to investments in companies characterised by temporary asset and financial imbalances but with adequate profitability prospects. Operations may be direct or indirect through the subscription of UCI units. TMA: What has been the operation of this project so far? Papa: Since its inception and up to 30th June 2022, CDP has disbursed about EUR 300 million in 13 operations, mainly through bonds. Among those that have requested support from “Patrimonio Rilancio” are about 50 companies concentrated in the following sectors: construction, infrastructure, food industry, transport, fashion, and tourism. None are listed on the stock exchange. Pizzarotti group and PSC are some beneficiaries. PSC, after the acquisition of Italtel, filed for composition with creditors (“concordato preventivo”). TMA: So far rather limited involvement. Papa: Yes, compared to a total of EUR 40 billion. But now the Fund, with particular regard to investments in restructuring, given the worsening macroeconomic context, which sees a rise in inflation and energy costs increased by the conflict in Ukraine, can act as a driving force to save many companies and with them jobs. Given the limits envisaged for direct investments (Article 24 envisages an intervention of EUR 250 million, a significant figure for the size of Italian companies), it seems reasonable to expect CDP to be more involved in investments in UCI. TMA: Just in recent months we have seen the first. However, the required size of these UCI, no less than 100 million, is considerable. Papa: In my opinion, some operators, if they are “sub-threshold” (i.e. below the minimum UCI size of EUR 100 million and minimum investment of EUR 30 million), could aggregate to achieve the aforementioned co-investment objectives with CDP, or set up dedicated UCI. TMA: the FNRI can invest in debt, equity or convertibles. Which do you think will be the most used technical form? Papa: Given the above and the market context that impacts on the key economic drivers of the companies and their sustainability, the investment of the assets in equity would seem to be the most predictable. |
| 3 March 2022 Several players active in the restructuring market have recently emerged and consolidated, such as servicers and turnaround funds. This context determines an increase in competition with an effect on the purchase price of impaired loans in turn influenced by the significant presence of guaranteed debts granted by the Italian State. It seems reasonable to expect a growing focus and specialization of operators on the assessment and management of the underlying credit relating to the company. The assessment includes 2 key elements: payback period and governance. Sometimes, the urgent repayment leads to M&A processes, assimilating the restructuring process to that of private equity. The development of the secondary market for non-performing loans or M&A is therefore expected in favor of more resilient companies.The situation of SMEs appears to be more difficult, both due to a lesser attention paid by creditors to corporate debt management and to a lesser willingness to grant loans. SMEs often identify with the entrepreneur, making changes in ownership and governance more difficult. Finally, the restructuring market attracts professionals who have not gained particular experience in these contexts in which, given the uncertain balance, an error of approach can lead to irreparable consequences. The selection, as always, will be made by the market in the hope that, in the meantime, the damage will be contained |
| 26 December 2021 How Business Restructuring changes after two years of Covid: we should get used to periodic pandemic peaks and related restrictions. The return to normality, from an economic point of view, may not mean the achievement of the pre-pandemic results, at least as also emerges from the experience gained in the 2007-2008 crisis. At that time the approach to corporate restructuring was aimed at postponing payments to better times, and the main role was played by financial institutions. The understanding not to go back to pre-crisis parameters has influenced the restructuring sector with more incisive measures on credit, and has led to the expansion of other players, including service companies and turnaround funds. During the period of the pandemic, companies have raised loans guaranteed by Italian state; it is reasonable that banks will be inclined to postpone repayments without affecting the amount of the guarantee. The complexity of the context is supported by professionals who have gained significant experience; in this regard, it is necessary to await the interpretation of the role of the Expert provided for by Legislative Decree 118/21, which will start in next weeks. It seems that are still elements that the practice and jurisprudence will have to deal with. Given that the Expert will be appointed by external entities, this procedure will probably be used to a lesser extent by larger companies; for smaller companies, the negotiated composition of the crisis could be useful, but this could depend on the results that the first practices will achieve. |
| 14 May 2021 The opportunity to recapitalize losses over 5 years could lead, in restructuring situations, given the lower degree of debt risk compared to equity, to the development of financial instruments (SFP) in the form of quasi-debt, pre-defining any conversion into equity only if necessary.This possible configuration may not be aligned with the needs deriving from the evaluation mechanisms by financial institutions (rating) or by customers / suppliers for the purposes of the going concern and full operation of the company. Debt instruments, however, collide with the need for credit protection with changes in govenance as well. The equity-governance issue is significant if represented in the context of the growth in the number of private equity operators in such situations.The development of the market could also be favored by government measures to support the economy, including, in particular, the “Patrimonio Destinato”, which also provides for co-investments, an element that hints at a development in the context of M&A.The aforementioned elements therefore suggest a development of M&A operations and related add-ons. Over time, in fact, the purchases of companies or branches of competing companies that have tried the path of the autonomous company rescue could increase. |
| 25 March 2021 Pandemic and debt restructuring agreements In 2021-2022, € 100 billion NPE positions are expected. Due to the pandemic, it is reasonable to foresee an increase in the procedures of arrangement with creditors “concordato”). However, these procedures are characterized by the slowness of the process, estimated by the Bank of Italy at 286 days for traditional procedures and 432 days in the case of reservations. If the impaired positions were to emerge in a short period of time, the Courts would be invaded by these procedures, also nullifying one of the main objectives of the Crisis Code.Debt restructuring agreements should be developed. Over time, measures have been introduced to encourage the use of these agreements: in addition to art. 182-septies, the Crisis Code provides the introduction of agreements with extended effectiveness. Although it is theoretically possible to manage an arrangement with creditors through the adherence to restructuring agreements by all creditors, the multiplicity and diversity of positions, which are not free from opportunistic acts, makes it impossible to reach agreements with many creditors.The possibility of differentiating restructuring agreements, by single creditor or by category, as well as a standard approach with the mass of minor creditors (in this case adherents), could allow several advantages benefits.The diffusion of a culture aimed at maximizing value and credit recovery times would allow an increase in restructuring agreements, to the benefit of the entire economic system. |
| 11 March 2021 Inflation is under control for now but there is a risk that it will come from the ESG criteria For many years, inflation was kept at low levels. The specter of inflation’s recovery immediately generated fears on the markets. The Next Generation Eu, the American stimulus plan, private savings, the rally in raw materials and possible difficulties in the supply and distribution chain all suggest an inflationary increase.Now, inflation, albeit at lower rates, is already in place. The outlook is primarily determined by the pandemic and vaccination plan, as well as by the ability of governments to incentivize economic growth and employment.Incentive policies are often linked to ESG criteria; the offer is strongly encouraged; however, to be effective, demand must also be stimulated in equal measure. In case of misalignment, inflation will soon rise. In the long term it is reasonable to expect an increase in inflation of even more than 2-3%.For companies, this is reflected both on the accounting estimates related to future prospective (business plan) and on the equity value. |
| 5 March 2021 The governance of SMEs is put to the ESG test The dogma according to which corporate sustainability passes from the achievement of ESG parameters, is achievable if these objectives are the natural execution of the corporate strategy, in order to avoid opportunistic behaviors. The funds available for ESG investments are significant. As regard the disclosure of non-financial information and the relative cost, we believe they do not constitute a problem, like the accounting or management reporting used to evaluate the choices made. Italian companies, often organized in districts, have a strong territorial integration (parameter S) often only not perceived or widespread. Governance (parameter G), appears to be the most delicate aspect. The real criticality, even if there is a willingness to expand and diversify the powers of the administrative body, remains its adequate functioning, according to a more managerial logic. |
| 5 February 2021 Mr. Draghi allow the crisis of confidence to the end. He certainly did not need any introduction. Just having mentioned the name of the proponent of “whatever it takes” generated immediate euphoria on the markets and caused the BTP Bund spread to drop close to 100. The international press rejoices at this news. Piazza Affari closed up by more than 2%, even the BTP-Bund spread reached a minimum of 105 basis points. The euphoric reaction of the markets bodes well for the destinies of Italian SMEs. A reaction that was rather obvious: Mr.Draghi is known internationally. Having a profile of this international stature as prime minister is an absolute novelty. But it’s too early to say victory for Italian companies. The formation of the government is still subject to the whims of the parties. The only certainty is that the person of Mr. Draghi could allow to obtain the approval by the Commission of a compliant Recovery Plan. The new government will solve the containment of the pandemic, vaccination plan and relaunch of businesses, in a context in which Italian GDP in 2020 drops by more than 9% and estimates for 2021 lowered to 3%. The theme of trust: Istat notes that in January 2021 the components of the consumer confidence index worsen and, looking at businesses, confidence is worsening in the manufacturing sector and in retail while it is increasing in market services and construction. Trust is a crucial issue because it is what sets consumer demand and business investment in motion. Now, despite the 1,700 billion euros on the current accounts of Italians and the positive cash situations of companies, no one is investing because fear is holding back the action. A Recovery Plan that prepares for the relaunch: the potential new Premier has the numbers to be able to present a Recovery Plan in line with EU requests, something that could not be said of the previous proposal. The presence of Mr. Draghi also reassures about the possibility of grounding the projects, respecting the progress of the works to which the disbursements of subsidies and loans are subject. All of this has direct and positive consequences on businesses.The crux of failures: Bank of Italy estimates that bankruptcies will be 6500 starting from 2022, and many other companies will be forced to restructure which is only partly due to the pandemic. Indeed, the whole series of support measures may have masked some previous situation of serious suffering. It is necessary to start again, leaving the logic of electoral tips; almost 150 billion euros were spent between Citizenship Income, Quota 100 and refreshments; money distributed like rain and without structural effects on the economy. This season of inefficient politics is over with Mr. Draghi. And perhaps one could be opened in which structural issues return to the center, from strategic infrastructures to schools, health care, justice reform to a true industrial policy that enhances the technological Made in Italy scattered throughout the territory. |
| 25 January 2021 50 year AIAF: 2001/2003 President Franco Carlo Papa |
| 17 October 2020 Debt restructuring season has started September 30th marked the start of debt restructuring season after the EBA’s decision do not extend the possibility of not classifying moratorium loans as impaired. It is likely that consequences will occur gradually at the end of the ongoing benefits and after 90 days for the classification of the credit as non-performing. We believe that the main topic in restructuring is the way of managing NPE and also the role and support that all economic operators will provide. Indeed, a framework, in which some economic players are assuming the role of aggregator of NPE positions held by banks, is going outlined. Taking into account the recent operations, a concentration of the market emerges, with few operators, including Amco and Prelios, willing to deal with sizable portfolios of NPE. These operators should develop a secondary market, especially in the UTP segment, which is expected to represent 30% of NPL transactions in 2021. Disposals on the secondary market will be mainly relate to unsecured or UTP credits, whose management requires a specialized financial and management know-how. Credit transfer it’s essential for timely management of the corporate crisis. Given the sharp decline in consumption, the current crisis appears mainly to be economic as well as financial, leading to the need of managerial support through investment for company turnaround and the resolution of financial difficulties. An important contribution could originate from the resources that will be provided by the Recovery Fund and “Patrimonio Destinato” (Assigned Assets) CDP. In order to realize a dynamic impaired credit system, must be considered that operators such as banks, funds and servicers require an adequate return on investment which depends on the business resilience, business management and consequently from any changes in governance. Therefore, avoiding to suffer choices by other operators, entrepreneurs and management should analyze the market to evaluate the most suitable operator to achieve the turnaround of their company, also sharing the governance scheme with it. |
| 15 September 2020 Mina NPL post Covid |
| 3 September 2020 Risk transfer and new credit management to support businesses According to the most recent studies, the current uncertainty regarding Covid-19 pandemic together with the need to recover the reduction in turnover generated during the lockdown, will cause liquidity problems for at least 60% of Italian firms. Even if the main objective is the return of turnover to pre-pandemic levels, liquidity undoubtedly plays a central role in the recovery. The economic scenario raises doubts about the ability of companies to generate cash flows to ensure daily operations.During the crises, especially for those generated by liquidity issues, the enterprise risk involves several stakeholders. In the past, in Italy, there has been a shift of risk from equity to debt involving creditors in a role that did not belong to them and leaving them the decisions on the company’s destiny. The effects of the current crisis will probably be assessed only in a few months. However, it is estimated that by the end of 2020 new impaired loans will emerge for an amount of 100-120 billion euros, almost equal to the total exposures held by banks.Firms losses in FY20 could deriving from the effects of the lockdown, the “historical problems” and also due to the mechanism for assigning the rating / support by the banks. The “shift of risk” to other financial operators, such as funds and servicers, changing the legal entity, could increase the possibility of financial injections, and could allow significant support to Italian firms.A proactive vision can expect the increase of the numbers of operators as well as the specialization of them and of the professionals by sector and by size of debt or investment, also in support or in collaboration with the major funds that relate with credit institutions for mass purchases. This would allow greater competence to support all companies, creating the conditions for the generation of value and adequate returns. |
| 3 July 2020 SMEs key role for growth One of the most debated topics in these times concerns the lack of firms liquidity caused by the lockdown. Liquidity is crucial to guarantee payments and, in many cases, business continuity, allowing the maintaining of an acceptable level of employment rate. For these reasons, several measures are being implemented by the Government to introduce liquidity into the economic system. Critical points are mainly related to allocation modes and choices, as well as the total amount needed. Accordingly, the scarcity of financial resources necessarily entails a selection process of companies worthy of support based both on the analysis of financial and industrial ratios. The latter are fundamental if we consider that Italy is a manufacturing country mainly made up of SMEs. Entrepreneurs need to be supported from a managerial and industrial point of view, allowing them to focus on their business and to follow the new technology and logistics trends generated during the lockdown, leaving to other entities the management of working capital issues (such as supply chain agreements, the structuring of participative financial instruments between companies and online factoring). A further contribution can be provided by different investment structures such as private equity funds – turnaround, club deal and servicer. At the same time, given the industrial characteristics of Italy, there is a clear need for the development of an infrastructure network that creates a favorable competitive environment. In conclusion, the recovery of the Italian economic system will be defined by the competitive and development capacity of SMEs supported by all stakeholder, especially from an industrial and managerial point of view. |
| 9 June 2020 Report: verso gli stati generali |
| 18 May 2020 Il Prezzo del virus |
| 16 May 2020 Business Combinations? Much faster with partecipative financial instruments The need to develop business combinations emerged in the context of “#RipartItalia, 100 ideas for recovery”, organized by Class Cnbc. These processes are realizable, but may have problems related to their duration. For example, an M&A process requires a medium-long period that is too long for business continuity in current circumstances. In Italy there are companies in crisis with difficulties in accessing bank credit, but there are also companies that have good financial strength. These companies can help the economic recovery by supporting business continuity of their network, supply chain or complementary ones. In order to achieve this goal, various financial instruments already exist, such as participative financial instruments. The advantages for issuing and subscribing companies are the following: a) rapid obtaining of financing; b) more time to overcome the current difficult moment; c) integration with a solid company, without losing its corporate value; d) helping companies deemed strategic; e) obtain a good return on the investment made; f) obtain constant monitoring of the investment and the issuer through administrative rights; g) have more time to evaluate and carry out aggregation processes (such as M&A). This situation improves relations between companies of different sizes and belonging to the same sector, creating more collaborative relationships and bringing commercial, social, strategic and financial advantages. Continuing your business within a larger group is better than letting it extinguish. |
| 29 April 2020 SME financing, the responsibilities of the directors In the current debate on corporate finance related to the Covid emergency 19, we believe that particular attention should be paid to the risk and liability profiles, both on the banks and on the corporate side. The Legislative Decree of 8 April 2020 does not provide for interventions regarding bankruptcy crimes, although a period of suspension of bankruptcy claims is foreseen. There is therefore an issue of management’ responsibilities in accessing these funds. For the typical entrepreneurial optimism, the tendency will be to make an immediate request for credit lines in the hope that these measures will be sufficient to resolve the crisis, having as a premise a quick restart. It is necessary to pay attention to the company situation before deliberating the request for financing, verifying, as far as possible, the ability to satisfy this debt together with past liabilities, in order to avoid any future liabilities. A legislative intervention would have an immediate application, however, the provision of a “tout court” waiver could lead to a distorted use of the derogation. The idea of a limited treasury plan (12 months) subject to certification by a third-party expert could be of useful help in this situation. This approach will allow to postpone the completed evaluation of the Plan and the most appropriate support measures. The speed of realization of this approach could be favored by 1) conceding (if not already done) of a moratorium on current loans, effectively granting a certain period of time to carry out what has been described; 2) greater information exchange between financial institutions aimed at spreading knowledge on the status of the companies being financed or risk sharing in order to speed up the decision-making process. |
| 6 November 2019 The hard release of companies in crisis: the aim to rescue distressed firms does not seem to deviate over the time. Banks are involved requesting financial and decision-making support, given that firms going concern passed through their choices. So far, the dynamics of corporate crisis resolution procedures have been oriented towards the postponement of the appropriate solution to the problem.In recent times, banks are moving to a) sell NPL and improve asset quality, b) avoid the form of new NPL loans. With regard to the credit disposal, single name / supply chain UTPs procedures now involves new players, such as private debt funds. This allows banks to “return” to do banks, shifting the decision-making role into funds.The companies that are still tied to a crisis resolution processes can now have the chance to exit. In 2012 we anticipated that the entrepreneur should change his relationship with financial institutions in analogy to what happened in private equity processes. Today, based on the entry of private debt funds, this approach is even more significant. Given that the objective of the funds is to enhance their investment, instead of passive approach, entrepreneurs should work proactively in managing their debt, to plan the “way out” of the fund and therefore the redemption of its company.The operational phase, characterized by rapidity of execution and multidisciplinary skills, will take on greater importance, supported by professionals who, in these years, have developed their own experiences and competences in this field, independently and with a business approach. |
| 5 September 2019 REPORT giovedi blocco 1 19.09.2019 REPORT giovedi blocco 2 19.09.2019 |
| 3 June 2019 PROGETTO ITALIA E CHOC FISCALE |
| 3 June 2019 GIUGNO AL VIA, LINEA DIFENSIVA GLOBALE |
| 13 December 2018 Innovations in the bankruptcy codeIn recent times many people often talk about the reform of Italian bankruptcy code and, in particular, the lack of a sufficient number of professionals in comparison with the needs. However, rather than the number of professionals, we need to look at their skills and acquired experiences. In fact, over the last ten years, specific professional skills in the various roles and stages of the crisis of companies have been developed. The expertise acquired in bankruptcy proceedings is different from that one relating to “going concern” activities (restructuring agreements and plans). It’s useful to develop a system for identifying, within professional categories, who is the most suitable to support companies, in accordance with their role and stage. Therefore, since the professional profiles already exist, broadening the knowledge to other professionals, in particular younger colleagues, should not be a problem if addressed through the “learning by doing” approach. The same consideration holds true as regards the increase in the number of statutory auditors. Since in smaller companies the auditors have a different and more extensive approach, it’s necessary to create a transition mechanism, based on the “learning by doing” among different levels of experience. |
| 18 October 2018 Integra World Wide Conference 2018: more than 300 professional advisors, from all over the world, will participate at Integra World Wide Conference in Florence, 18th-20th October.It is The main topics of discussion will be: IT security, cyber currency, blockchain and banks’ financial situation. Among others, speakers will be Mr Scibetta- President of Integra International, Mr. Moulin – President of ABL and Mr Kirby who represent CII (Counsil of International Investigation). All Italian members of Integra will partecipate in the event, including PGS Consulenti/Studio Papa. Mr Papa will expose in particular the Italian market opportunity in Cross Border M&A and UTP / “Single Name” Acquisition. |
| 11 giugno 2018 Dal G7 alla Bce: piu’ Dazi, meno QE? |
| 21 March 2018 It is more effective for banks to sell Utp credits to specialized operators than continuously write-down them Recently the banking system has been involved in the significant disposal of Npl. Today the focus is on Utp (Unlikely to pay) loans, namely credits deemed difficult to recover. The Utp loans market is worth about 100 billion euro. In order to avoid the transition of Upt to Npl, it is necessary to act. In this context it is worth to evaluate the trade off between managing and selling Utp. It is believed that the disposal processes will be preferred in the future also considering that the management of Utp has not yet led to the expected results. In fact, about 40% of the restructuring agreements have ended after four years with companies in wound up or bankruptcy proceedings. An efficient and timely sale of the Utp allows to achieve a better profitability. The tendency of the banks is to reduce the incidence of Npl on the total through an increase in coverage. However, the increase in coverage does not solve the problem, rather it makes it heavier.The value of Utp, given the underlying distressed companies, highlights the need of managing the company in a specialized and timely manner. It will therefore be difficult to sell Utp loans as a whole, while the disposals of a single debtor company (single name) or limited aggregations (for the same sector or production chain) will be the best way to deal with Utp loans, also in terms of greater valorization for banks. The process of Utp disposals, presumes an effective relaunch / restructuring of the companies involved. Therefore, specialist skills are required both in terms of corporate restructuring and credit management. Recently, investors interested in this activity range from entrepreneurs who want to invest in complementary distressed companies, to national or international funds and investment banks, that are raising funds in order to run these activities, up to Spac aimed at managing Utp. This is an opportunity that banks can not lose in order to monetize substandard loans and get back, after years of managing corporate reorganization processes, to play their role as credit managers. |
| 20 March 2018 Risanamento, Intesa and Unicredit Board of Directors lists The following lists of candidates have been received by Risanamento on March 19, 2018 for the appointment of the Board of Directors to be submitted to the next Risanamento Shareholders’ Meeting called for April 13, 2018 (with a second call convened for April 16, 2018). LIST 1 – Intesa Sanpaolo, owner of 48.9% of the ordinary shares, presented the following list: 1. Claudio Calabi, 2. Giulia Pusterla, 3. Giancarlo Scotti, 4. Antonia Maria Negri Clementi, 5. Guido Croci. LIST 2 – Unicredit, owner of 22.231% of the ordinary shares, presented the following list: 1. Franco Carlo Papa |
| 29 January 2018 January 2018, Toro scatenato |
| 27 January 2018 Milan: important dinner to discuss the debt refinancing In a renowned Japanese restaurant in the center of Milan was held the operative/executive meeting between Han Li, Marco Fassone and two other members of Milan’s Board of Director: the Lawyer Roberto Cappelli and the Manager Marco Capuano.The new element is represented by the attendance of Franco Carlo Papa, President of the Audit Board and President of the consulting firm PGSConsulenti, specialized in corporate debt restructuring. The presence of Mr.Papa is connected to the financial side of the club and to the refinancing of the Elliott debt (303 mln), that will have to be paid backwithin October2018; specifically, the possibility to work with the Investment Bank BofA Merrill Lynch was discussed in order to find the right investor, in lightof the withdrawal of the fund Highbridge’s proposal. |
| 26 January 2018 Milan: important dinner to discuss the debt refinancing In a renowned Japanese restaurant in the center of Milan was held the operative/executive meeting between Han Li, Marco Fassone and two other members of Milan’s Board of Director: the Lawyer Roberto Cappelli and the Manager Marco Capuano.The new element is represented by the attendance of Franco Carlo Papa, President of the Audit Board and President of the consulting firm PGSConsulenti, specialized in corporate debt restructuring. The presence of Mr.Papa is connected to the financial side of the club and to the refinancing of the Elliott debt (303 mln), that will have to be paid backwithin October2018; specifically, the possibility to work with the Investment Bank BofA Merrill Lynch was discussed in order to find the right investor, in lightof the withdrawal of the fund Highbridge’s proposal. |
| 22 December 2017 Stefanel SpA has appointed the new board of auditors Stefanel SpA has appointed the new board of directors and board of auditors. Franco Carlo Papa has been nominated as a member of the board of auditors |
| 25 October 2017 Well done the new bankruptcy law, but why excluding large companies from crisis alerting system? In order to improve the protection of creditors, the approved law envisages the obligation to report when certain parameters are exceeded. Mechanisms such as monitoring and planning will allow the company not to crash in crisis and should avoid an external subject to enter in the solving problem business process.In addition, the new bankruptcy law excludes large companies from activating alert procedures and reporting obligations. Nowadays, it has been developed a consolidated system consisting of subjects now able to managing business crises professionally. However, this choice does not impose reporting obligations on qualified public creditors and their control bodies. |
| 24 August 2017 Big old guys look. Who will be the heir of Guido Rossi The article (Il Fatto Quotidiano newspaper) reports Franco Carlo Papa in the list of profiles of leading Italian experts. |
| 8 July 2017 Ratings to the bailout The article (Milano Finanza newspaper) deals with a poll result about the main banking restructuring operations in the last 2 years, in which Franco Carlo Papa, among others, is part of the panel. |
| 9 May 2017 The fund Idea Ccr takes Sinterama control The article (Milano Finanza – sezione Mercati newspaper) deals with Sinterama S.p.A. debt restructuring plan certificated by Franco Carlo Papa as independent expert. Sinterama is European leader in the production of coloured polyester threads and yarns, with total revenue of 135 million Euros. |
| 29 April 2017 Parmalat, closed investigations into the Lag case The article (Gazzetta di Parma newspaper) deals with the shareholders’ meeting of Parmalat in which Franco Carlo Papa was appointed member of the new Board of Statutory Auditors. |
| 28 April 2017 CPL restructures debt The article (Milano Finanza newspaper) deals with the CPL Concordia debt restructuring through an agreement signed in compliance with ex art.67 L.F., based on a financial and industrial plan certificated by Franco Carlo Papa as independent expert. CPL is one of the major players in national energy services (energy management, photovoltaic system, natural gas-fuelled cogeneration etc..) with a consolidated value of production of 371.1 million Euros. |
| 24 December 2016 Champions of 2016 The article (Milano Finanza newspaper) resumes the results of a survey on the best Italian managers and entrepreneurs in 2016. Franco Carlo Papa is part of the panel. |
| 19 December 2016 FS Sistemi Urbani Chairman Franco Carlo Papa speaks at a workshop on the future of brownfield sites Series of articles on the workshop “Railyards and the new city” organised by FS Sistemi Urbani — the property management arm of the national railway group — with the Municipality of Milan. The event aimed to imagine the city of tomorrow, taking as its starting point railway brownfield sites. Participants included the Chairman of FS Sistemi Urbani Franco C. Papa. One of the most interesting projects, “Circle line” by Trenord, connected the most used public transport systems with seven disused railyards forming the heart of an urban transformation project in Milan to reconnect the city centre with the outskirts. |
| 27 October 2016 Papa: Increasing interest in companies that have rediscovered their DNA Interview with Franco Carlo Papa in which he reflects, as a professional expert in the field of company restructuring, on a recent and successful trend that has seen renewed focus on core business and a move away from merely financially-based attempts at expansion. Market analysis provides an ever greater number of instances of medium-to-large companies that have come back from the brink of disaster to concentrate on doing what they know best, in the process restoring their appeal to Italian and foreign funds. |
| 8 October 2016 Chiarini at the helm of Manutencoop The article (Milano Finanza newspaper) reports the appointment of Franco Carlo Papa in Manutencoop board of directors. Manutencoop is the leading Italian Integrated Facility Management operator, serving public and private customers for properties, the environment and in support of health care services, with a Consolidated turnover of 955.7million Euros and a Consolidated EBITDA of 93.1 million Euros. |
| 27 July 2016 DLA Piper, KPMG, Pedersoli and Studio Papa involved in Enerpoint reorganisation This article deals with the reorganisation of Enerpoint, underlining the role of the Studio Papa, which drew up the report certifying the agreement. |
| 21 June 2016 PGS Consulenti assists the Gruppo Giochi Preziosi in debt refinancing The 2014-2015 financial statements of the Gruppo Giochi Preziosi ended a long series of negative results, stabilising the group’s economic and financial situation and restoring the trust of the banks. A key factor in this turnaround was refinancing of debt amounting to 140 million euro, assisted by PGS Consulenti. |
| 3 March 2016 Gas market still trapped between new models and old problems This article provides economic analysis of the outlook for a gas market currently overshadowed by several negative factors. In Europe the level of reserves is high with only moderate demand, while in Asia decisions regarding the type of technology to be used for electrical power generation are an important factor. The first signs of oversupply are also beginning to show in Asia, and unless oversupply issues can be resolved, there could be convergence between the three main global markets (Asia, Europe and American) with a consequent drop in gas prices. |
| 3 December 2015 Lack of planning in corporate decision-making and improvement of rating Luca Sala and Marco Grappa (Partners of PGS Consulenti) underline the need to implement an appropriate system of financial planning as part of ordinary company activity and not just in times of crisis. Furthermore, clear reporting procedures might improve the correspondence of balance sheets to budgets. This is also important for periodical rating reviews. |
| 19 November 2015 When is company recovery over? This article by Luca Sala and Marco Grappa (Partners of PGS Consulenti) highlights the fact that, in the case of plans under Article 67 of the Bankruptcy Act, recovery has been clearly achieved when all debtors have discharged their obligations or on expiry of the term of the business plan. Recovery may also be deemed to be complete even prior to expiry of the plan where it is judged that the financial situation has stabilised following positive events. |
| 1 October 2015 The new Italian valuation principles should also be used for equity instruments Franco Carlo Papa (Chairman of PGS Consulenti) underlines the need for valuation experts to consider all privileges, including capital or administrative rights, in order to provide a proper estimate of the value of equity instruments. The existence of privileged capital rights, as indicated by the new Italian valuation principles (PIV), leads to a non-proportional distribution of the flows generated by the company between the different categories of instrument and of asset value following a liquidity event. |
| 15 September 2015 How the new Italian valuation principles will improve transparency and uniformity Carlo Papa (Chairman of PGS Consulenti) highlights how valuation, as provided for under the new Italian valuation principles (PIV) that will come into force on 1.1.2016, must be founded on the following requirements: – Rationality – the estimate must follow a rigorous and convincing logical model; – Verifiability – the valuation process must be reconstructable and be based on reasonable premises and reliable and authoritative sources; – Coherence – correspondence between information, aims of valuation and results achieved; – Reliability – objectivity of data, discretion on the part of the expert performing valuation being limited as much as possible. |
| 10 July 2015 New Article 182 of the Bankruptcy Act speeds things up but reduces confidentiality This article by Marco Grappa and Luca Sala (Partners di PGS Consulenti) underlines how Article 182-septies aims to encourage achievement of the majorities provided for under Article 182-bis, allowing possible disagreement between credit institutions. The new majorities might in future replace current procedures in accordance with Article 67, which however, being private in nature, do not require court intervention and ensure a greater degree of confidentiality in relation to customers and suppliers. |
| 26 June 2015 The delicate task of the independent expert in company crises Franco Carlo Papa (Chairman of PGS Consulenti) examines the ever larger burden of responsibility placed on the independent expert who is increasingly seen as the guarantor of bankruptcy procedures. The independent expert must strive for a balanced mix of accounting and corporate concerns, focussing on the task of providing an opinion on a plan following professional and independent certification process. |
| 18 June 2015 Article 182-bis and the excessive misalignment parties and non-parties to agreements This article by Franco Carlo Papa (Chairman of PGS Consulenti) highlights how the debt restructuring agreement alters the par conditio creditorum: creditors who are not parties to the agreement gain privileges over signatories. Those not signing the agreement must be paid in full within 120 days, an attractive option given the current payments situation in Italy. |
| 6 June 2015 Reorganisations: how to exit the tunnel An interview with Franco Carlo Papa (Chairman of PGS Consulenti) in which he underlines that the arrangement with creditors is still the most used tool, even if larger companies tend to prefer recovery plans under Article 67 of the Bankruptcy Act, given the absence of public disclosure requirements. The greater need for debt reduction could see a rise in the number of debt restructuring agreements under Article 182-bis of the same act. To date the improved the economic environment has not been reflected in restructuring processes, although its effects might be felt in a few years’ time. |
| 5 June 2015 New offence of fraudulent accounting in force from 14 June 2015 This article by Marco Grappa (Partner of PGS Consulenti) examines the new offence of fraudulent accounting (for listed and non-listed companies) involving wrongful inclusion or omission of material facts that would tend objectively to mislead others. These offences are classified as “crimes of danger” rather than “crimes of damage” since it is no longer necessary to demonstrate that loss or damage has actually been caused by such unlawful accounting methods. |
| 22 February 2014 Distressed M&A Hosted by Unicredit, Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti), together with the DLA Piperteam made up of Partners Antonio Lombardo and Alberto Angeloni, tackled the broad question of Distressed M&A. After a detailed analysis of the specifics of crisis resolution procedures, the role and duties of the independent expert were examined in an attempt to set the process in its context. The distinctive features of Distressed M&A were then analysed in relation to company valuation in crisis situations, the approach of the financial institutes, critical issues, essential factors for success, as well as to timing and the preparation of contracts. |
| 3 January 2014 Companies need to adopt a new mindset to change Italian finance Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) note how Italian entrepreneurial culture, which has always valued reserve, is hard to reconcile with the ever-increasing demand for communication, information and transparency by the banks. This is all the more important in the bank-centric Italian system. In order to overcome crisis successfully, the new challenge is to adopt an innovative model in terms of culture, governance and transparency, creating a managerial structure, in part through merger processes, that is increasingly less tied to the charismatic figure of the founder, thus contributing to the growth of the company and more in general of the Italian competitive environment. |
| 16 November 2013 The role and responsibilities of the independent expert At the second master’s course for specialisation in the new bankruptcy procedures for corporate crisis management, the presentation by Franco Carlo Papa (Chairman of PGS Consulenti) looked at the role and responsibility of the independent expert. Following a brief introduction on the origins and aims of this role, general and individual professional requirements were examined, together with a detailed analysis of relevant civil and criminal liability. Using summary charts and a description of the principles and guidelines to be followed, the activities required of the independent expert were described, with the help of some practical examples, in relation to truthfulness of data, feasibility of the plan and other specific assessments (such as the viability of the agreement and best deal for creditors). |
| 14 November 2013 New investors and M&A: the future for companies that have survived the crisis This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) analyses the conditions necessary for restoring company competiveness through consolidation processes in the current crisis environment. Detailed attention is given to the conditions for developing: 1) business valuation, 2) processes of concentration, 3) debt adjustment, 4) new forms of borrowing. Indeed such new forms of borrowing need to be tested to overcome or at least mitigate the current bank-centric system. |
| 23 October 2013 Greater focus on competences and synergies rather than multiples needed in M&As involving companies in crisis This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) examines the opportunities for development involved in M&A processes during crisis situations, seen as important for restoring competitiveness to the Italian system. Close attention is given to the possible roles of creditors (the main promoters of company recovery), of the professionals providing assistance to companies during these operations and of turnaround funds. In these situations it is therefore fundamental to concentrate on synergies and competences rather than simply on purchase prices, both in the acquisition phase and in the later corporate management phase. |
| 20 August 2013 One of the effects of the crisis is a need to review the lending system Article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) on the issue of bank lending, which until the start of the crisis tended to focus on returns and which now, following the company reorganisations of the last five years, tends to prioritise protection of credit through support for business continuity. It is therefore expected that in the future the banks will adopt a different view on lending, based more closely on actual company dynamics, also with a view to reducing the sort of asymmetries between the banks and companies that all too often feature in procedures for company crisis resolution. |
| 8 August 2013 The “blank” arrangement is a good idea but some aspects need to be fine-tuned Following the introduction of the “blank” (or “with reserve”) arrangement with creditors, Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) examine the positive and negative aspects of its practical implementation. Several requests have already been received only a few months after the introduction of the new measure. However, in many cases it has simply been used as a means of delaying bankruptcy. This has led to legislative amendments such as the option of immediate appointment of a commissioner and periodical disclosure requirements. The authors examine the pros and cons of the recent measure, also suggesting a new way of reaching agreement between companies and creditors. |
| 16 July 2013 To get help from the bank, a company must have a clear long-term strategy Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) see strategic and financial plans as essential common tools for exiting the crisis, ending the vicious circle that is hampering economic development. The plan is used as the central valuation tool for supporting business continuity in most of the crisis resolution procedures examined. It should therefore also become the tool generally used by companies to provide accurate strategic and financial information benefitting all stakeholders, including the banks, allowing better assessment of creditworthiness and company rating. |
| 11 June 2013 There will be no end to the crisis so long as Italian companies focus exclusively on control in M&As This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) argues that current actions taken by companies to focus on core business, eliminate inefficiencies and restructure debt might not be sufficient in the current competitive environment. M&A activity is instead required, in which entrepreneurs need to abandon their obsession with control, developing a new type of cooperation across a range of areas including obtaining new financial resources. |
| 23 May 2013 The independent expert should help to find solutions instead of looking to replace the notary in company crises Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) explain the role independent experts play in relations between the banks and creditors, where they are used by entrepreneurs and creditors for fair conduct of the negotiation process, prior to issuing their reports. The authors believe that such experts, although appointed to act autonomously, must take part in this process aimed at the social good of saving the company. On the other hand, independent experts cannot limit their function to auditing present and future accounting data, but must also carry out company-level valuation. Finally the authors ask whether the role could be expanded to cover monitoring of the plan, leading to greater involvement of the expert in assessment of actual implementation. |
| 3 December 2012 How to overcome a company crisis In this article Franco Carlo Papa (Chairman of PGS Consulenti) examines the approaches and steps required for overcoming a company crisis, stressing in particular the need for a change of mindset on the part of all those involved: banks need to move away from the “simple lender” model while entrepreneurs need to abandon their exclusive focus on profits. This would benefit both companies and society, creating a virtuous circle contributing to economic development. Indeed, recovery processes are company selection processes. The case of Xilopan is then examined as a positive example of the arguments put forward. |
| 24 August 2012 Covenants should not be the last arbiters of company survival This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) deals with timing and other practical details of recovery agreements. The authors show that in practice a great deal of time is spent on defining components of the plans or agreements, such as covenants, on which no prior decision has been taken. Considering the requirements of company rescues and the time needed for drawing up agreements, this article argues that it is more important to focus on the process of achieving and maintaining continuity than on initial valuations. This would require introducing suitable mechanisms for defining and monitoring the plan, identifying remedies and solutions in the event of positive or negative deviations. |
| 14 August 2012 Less opportunistic approach to company crises needed from entrepreneurs and bankers Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) examine the evident opportunism hampering the company reorganisation market, both on the part of the banks (given their role in decision-making and supporting business continuity) and entrepreneurs (especially in the approach to credit management and subsequent disclosures of difficulty). Given the need on the part of companies to adopt a clear and shared approach with all institutions, the banks are exerting asymmetric and unregulated bargaining powers, causing uncertainty as well as other issues at managerial level. A possible solution might be regulatory action aimed at fostering a fairer approach to the process of negotiation and drafting of agreements. |
| 3 August 2012 Banks should think beyond interest and fees in company reorganisations This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) examines the often conflicting approach taken by banks and entrepreneurs to crisis. Banks aim to protect credit rather than fostering company meritocracy. Since they are on the frontline in company rescues, banks should go beyond providing financial support and also offer business input (a little like shareholders). Entrepreneurs, on the other hand, should focus on social responsibility, finding ways to work alongside these new partners and enhancing executive thinking to overcome the crisis affecting their company. |
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24 June 2023
Evolution in Corporate Restructuring Corporate restructuring has lately been evolving, leading to the dissolution of the bank-centric system, also dependent on the change of the actors involved.For regulatory aspects we are witnessing the transfer of stage 3 credits and the management of stage 2 credits. Utp’s management is characterized by the transfer of bank credit, the interruption of credit lines and the absence of new finance.Future development could focus on credits in stage 2, characterized by an information asymmetry in favor of the borrower. The entrepreneur could use this in his own favor so as to maximize his profit and that of the company, to select his own restructuring partner and to hinder the banks from making such a choice. The 2 key factors are governance and performance. Anticipating the choice of a partner allows the latter to purchase at a lower price from banks, and this advantage could be shared with the owner of the company. However, the entrepreneur has to give up on part of the role he’d play in managing the corporate governance profile of his enterprise.10 May 2023
Franco Carlo Papa will participate at the conference: “The recovery plan in the context of the crisis code” organized by the Catholic University of the Sacred Heart, in memory of prof. Martinelli.29 April 2023
In an interview with BeBeez magazine, Franco Carlo Papa presents his thoughts one year after the entry into force of the Crisis Code,: In an interview with BeBeez magazine, Franco Carlo Papa presents his thoughts one year after the entry into force of the Crisis Code. In particular, he highlights how the “Negotiated Composition”, which is not currently enjoying great success, could prove to be the access to traditional crisis resolution procedures, as the role of supervisory bodies has been accentuated, with greater impact on SMEs. He also describes his experience as an Expert in the “Negotiated Composition” of a software company and how this procedure proved to be a tool for the emergence of the crisis, albeit not too anticipated, which led to reflections on the method to get out of the crisis.27 April 2023
Franco Carlo Papa (Studio Papa) provided a comfort opinion in support of the industrial and financial maneuver related to Inseme: a company active in the bovine genetics sector. The company’s debt, amounting to approximately € 13 million, was restructured as part of a complex investment transaction that included an American company as sole shareholder, the renegotiation of debts with suppliers and banks and the issue of a letter of credit by Bank of America. K&L Gates advised Banco BPM, BPER Banca, and Intesa Sanpaolo, while CMS and R&S Advisory provided support, respectively to Inseme and its American investor. - + 2022
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9 November 2022
The point on “Patrimonio Rilancio” The “Patrimonio Rilancio” project, an extraordinary EUR 40 billion fund envisaged by the MEF in the post-pandemic period to support larger Italian companies who report revenues of more than EUR 50 million, is now getting into full swing, with investments in the first management vehicles selected under the National Fund for Enterprise Restructuring (NFER). We talk about this with Franco Carlo Papa, one of the independent experts accredited at the Ministry of the Treasury for the asseveration of the operations of the National Fund for Restructuring, which foresees interesting developments for the specialised private equity industry. TMA: How is this initiative articulated? Papa: In detail, the actions are articulated around a National Fund for Temporary Support (NFTS) for interventions in healthy companies that have been impacted by Covid-19. These measures are part of the temporary framework through loans of various types and capital increases. This is flanked by a second initiative known as the Free Market, which envisages the involvement of other market investors and is articulated in two separate instruments: the National Strategic Fund (NSF), which makes both direct and indirect investments in healthy companies with solid growth prospects. The company is not in difficulty, and the investment by the Fund takes place, together with co-investors, through capital increases and convertible bonds. Finally, there is the National Fund for Enterprise Restructuring, dedicated to investments in companies characterised by temporary asset and financial imbalances but with adequate profitability prospects. Operations may be direct or indirect through the subscription of UCI units. TMA: What has been the operation of this project so far? Papa: Since its inception and up to 30th June 2022, CDP has disbursed about EUR 300 million in 13 operations, mainly through bonds. Among those that have requested support from “Patrimonio Rilancio” are about 50 companies concentrated in the following sectors: construction, infrastructure, food industry, transport, fashion, and tourism. None are listed on the stock exchange. Pizzarotti group and PSC are some beneficiaries. PSC, after the acquisition of Italtel, filed for composition with creditors (“concordato preventivo”). TMA: So far rather limited involvement. Papa: Yes, compared to a total of EUR 40 billion. But now the Fund, with particular regard to investments in restructuring, given the worsening macroeconomic context, which sees a rise in inflation and energy costs increased by the conflict in Ukraine, can act as a driving force to save many companies and with them jobs. Given the limits envisaged for direct investments (Article 24 envisages an intervention of EUR 250 million, a significant figure for the size of Italian companies), it seems reasonable to expect CDP to be more involved in investments in UCI. TMA: Just in recent months we have seen the first. However, the required size of these UCI, no less than 100 million, is considerable. Papa: In my opinion, some operators, if they are “sub-threshold” (i.e. below the minimum UCI size of EUR 100 million and minimum investment of EUR 30 million), could aggregate to achieve the aforementioned co-investment objectives with CDP, or set up dedicated UCI. TMA: the FNRI can invest in debt, equity or convertibles. Which do you think will be the most used technical form? Papa: Given the above and the market context that impacts on the key economic drivers of the companies and their sustainability, the investment of the assets in equity would seem to be the most predictable.3 March 2022
Several players active in the restructuring market have recently emerged and consolidated, such as servicers and turnaround funds. This context determines an increase in competition with an effect on the purchase price of impaired loans in turn influenced by the significant presence of guaranteed debts granted by the Italian State. It seems reasonable to expect a growing focus and specialization of operators on the assessment and management of the underlying credit relating to the company. The assessment includes 2 key elements: payback period and governance. Sometimes, the urgent repayment leads to M&A processes, assimilating the restructuring process to that of private equity. The development of the secondary market for non-performing loans or M&A is therefore expected in favor of more resilient companies.The situation of SMEs appears to be more difficult, both due to a lesser attention paid by creditors to corporate debt management and to a lesser willingness to grant loans. SMEs often identify with the entrepreneur, making changes in ownership and governance more difficult. Finally, the restructuring market attracts professionals who have not gained particular experience in these contexts in which, given the uncertain balance, an error of approach can lead to irreparable consequences. The selection, as always, will be made by the market in the hope that, in the meantime, the damage will be contained - + 2021
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26 December 2021
How Business Restructuring changes after two years of Covid: we should get used to periodic pandemic peaks and related restrictions. The return to normality, from an economic point of view, may not mean the achievement of the pre-pandemic results, at least as also emerges from the experience gained in the 2007-2008 crisis. At that time the approach to corporate restructuring was aimed at postponing payments to better times, and the main role was played by financial institutions. The understanding not to go back to pre-crisis parameters has influenced the restructuring sector with more incisive measures on credit, and has led to the expansion of other players, including service companies and turnaround funds. During the period of the pandemic, companies have raised loans guaranteed by Italian state; it is reasonable that banks will be inclined to postpone repayments without affecting the amount of the guarantee. The complexity of the context is supported by professionals who have gained significant experience; in this regard, it is necessary to await the interpretation of the role of the Expert provided for by Legislative Decree 118/21, which will start in next weeks. It seems that are still elements that the practice and jurisprudence will have to deal with. Given that the Expert will be appointed by external entities, this procedure will probably be used to a lesser extent by larger companies; for smaller companies, the negotiated composition of the crisis could be useful, but this could depend on the results that the first practices will achieve.14 May 2021
The opportunity to recapitalize losses over 5 years could lead, in restructuring situations, given the lower degree of debt risk compared to equity, to the development of financial instruments (SFP) in the form of quasi-debt, pre-defining any conversion into equity only if necessary.This possible configuration may not be aligned with the needs deriving from the evaluation mechanisms by financial institutions (rating) or by customers / suppliers for the purposes of the going concern and full operation of the company. Debt instruments, however, collide with the need for credit protection with changes in govenance as well. The equity-governance issue is significant if represented in the context of the growth in the number of private equity operators in such situations.The development of the market could also be favored by government measures to support the economy, including, in particular, the “Patrimonio Destinato”, which also provides for co-investments, an element that hints at a development in the context of M&A.The aforementioned elements therefore suggest a development of M&A operations and related add-ons. Over time, in fact, the purchases of companies or branches of competing companies that have tried the path of the autonomous company rescue could increase.25 March 2021
Pandemic and debt restructuring agreements In 2021-2022, € 100 billion NPE positions are expected. Due to the pandemic, it is reasonable to foresee an increase in the procedures of arrangement with creditors “concordato”). However, these procedures are characterized by the slowness of the process, estimated by the Bank of Italy at 286 days for traditional procedures and 432 days in the case of reservations. If the impaired positions were to emerge in a short period of time, the Courts would be invaded by these procedures, also nullifying one of the main objectives of the Crisis Code.Debt restructuring agreements should be developed. Over time, measures have been introduced to encourage the use of these agreements: in addition to art. 182-septies, the Crisis Code provides the introduction of agreements with extended effectiveness. Although it is theoretically possible to manage an arrangement with creditors through the adherence to restructuring agreements by all creditors, the multiplicity and diversity of positions, which are not free from opportunistic acts, makes it impossible to reach agreements with many creditors.The possibility of differentiating restructuring agreements, by single creditor or by category, as well as a standard approach with the mass of minor creditors (in this case adherents), could allow several advantages benefits.The diffusion of a culture aimed at maximizing value and credit recovery times would allow an increase in restructuring agreements, to the benefit of the entire economic system.11 March 2021
Inflation is under control for now but there is a risk that it will come from the ESG criteria For many years, inflation was kept at low levels. The specter of inflation’s recovery immediately generated fears on the markets. The Next Generation Eu, the American stimulus plan, private savings, the rally in raw materials and possible difficulties in the supply and distribution chain all suggest an inflationary increase.Now, inflation, albeit at lower rates, is already in place. The outlook is primarily determined by the pandemic and vaccination plan, as well as by the ability of governments to incentivize economic growth and employment.Incentive policies are often linked to ESG criteria; the offer is strongly encouraged; however, to be effective, demand must also be stimulated in equal measure. In case of misalignment, inflation will soon rise. In the long term it is reasonable to expect an increase in inflation of even more than 2-3%.For companies, this is reflected both on the accounting estimates related to future prospective (business plan) and on the equity value.5 March 2021
The governance of SMEs is put to the ESG test The dogma according to which corporate sustainability passes from the achievement of ESG parameters, is achievable if these objectives are the natural execution of the corporate strategy, in order to avoid opportunistic behaviors. The funds available for ESG investments are significant. As regard the disclosure of non-financial information and the relative cost, we believe they do not constitute a problem, like the accounting or management reporting used to evaluate the choices made. Italian companies, often organized in districts, have a strong territorial integration (parameter S) often only not perceived or widespread. Governance (parameter G), appears to be the most delicate aspect. The real criticality, even if there is a willingness to expand and diversify the powers of the administrative body, remains its adequate functioning, according to a more managerial logic.5 February 2021
Mr. Draghi allow the crisis of confidence to the end. He certainly did not need any introduction. Just having mentioned the name of the proponent of “whatever it takes” generated immediate euphoria on the markets and caused the BTP Bund spread to drop close to 100. The international press rejoices at this news. Piazza Affari closed up by more than 2%, even the BTP-Bund spread reached a minimum of 105 basis points. The euphoric reaction of the markets bodes well for the destinies of Italian SMEs. A reaction that was rather obvious: Mr.Draghi is known internationally. Having a profile of this international stature as prime minister is an absolute novelty. But it’s too early to say victory for Italian companies. The formation of the government is still subject to the whims of the parties. The only certainty is that the person of Mr. Draghi could allow to obtain the approval by the Commission of a compliant Recovery Plan. The new government will solve the containment of the pandemic, vaccination plan and relaunch of businesses, in a context in which Italian GDP in 2020 drops by more than 9% and estimates for 2021 lowered to 3%. The theme of trust: Istat notes that in January 2021 the components of the consumer confidence index worsen and, looking at businesses, confidence is worsening in the manufacturing sector and in retail while it is increasing in market services and construction. Trust is a crucial issue because it is what sets consumer demand and business investment in motion. Now, despite the 1,700 billion euros on the current accounts of Italians and the positive cash situations of companies, no one is investing because fear is holding back the action. A Recovery Plan that prepares for the relaunch: the potential new Premier has the numbers to be able to present a Recovery Plan in line with EU requests, something that could not be said of the previous proposal. The presence of Mr. Draghi also reassures about the possibility of grounding the projects, respecting the progress of the works to which the disbursements of subsidies and loans are subject. All of this has direct and positive consequences on businesses.The crux of failures: Bank of Italy estimates that bankruptcies will be 6500 starting from 2022, and many other companies will be forced to restructure which is only partly due to the pandemic. Indeed, the whole series of support measures may have masked some previous situation of serious suffering. It is necessary to start again, leaving the logic of electoral tips; almost 150 billion euros were spent between Citizenship Income, Quota 100 and refreshments; money distributed like rain and without structural effects on the economy. This season of inefficient politics is over with Mr. Draghi. And perhaps one could be opened in which structural issues return to the center, from strategic infrastructures to schools, health care, justice reform to a true industrial policy that enhances the technological Made in Italy scattered throughout the territory.25 January 2021
50 year AIAF: 2001/2003 President Franco Carlo Papa - + 2020
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17 October 2020
Debt restructuring season has started September 30th marked the start of debt restructuring season after the EBA’s decision do not extend the possibility of not classifying moratorium loans as impaired. It is likely that consequences will occur gradually at the end of the ongoing benefits and after 90 days for the classification of the credit as non-performing. We believe that the main topic in restructuring is the way of managing NPE and also the role and support that all economic operators will provide. Indeed, a framework, in which some economic players are assuming the role of aggregator of NPE positions held by banks, is going outlined. Taking into account the recent operations, a concentration of the market emerges, with few operators, including Amco and Prelios, willing to deal with sizable portfolios of NPE. These operators should develop a secondary market, especially in the UTP segment, which is expected to represent 30% of NPL transactions in 2021. Disposals on the secondary market will be mainly relate to unsecured or UTP credits, whose management requires a specialized financial and management know-how. Credit transfer it’s essential for timely management of the corporate crisis.
Given the sharp decline in consumption, the current crisis appears mainly to be economic as well as financial, leading to the need of managerial support through investment for company turnaround and the resolution of financial difficulties. An important contribution could originate from the resources that will be provided by the Recovery Fund and “Patrimonio Destinato” (Assigned Assets) CDP.
In order to realize a dynamic impaired credit system, must be considered that operators such as banks, funds and servicers require an adequate return on investment which depends on the business resilience, business management and consequently from any changes in governance. Therefore, avoiding to suffer choices by other operators, entrepreneurs and management should analyze the market to evaluate the most suitable operator to achieve the turnaround of their company, also sharing the governance scheme with it.15 September 2020
Mina NPL post Covid3 September 2020
Risk transfer and new credit management to support businesses According to the most recent studies, the current uncertainty regarding Covid-19 pandemic together with the need to recover the reduction in turnover generated during the lockdown, will cause liquidity problems for at least 60% of Italian firms. Even if the main objective is the return of turnover to pre-pandemic levels, liquidity undoubtedly plays a central role in the recovery. The economic scenario raises doubts about the ability of companies to generate cash flows to ensure daily operations.During the crises, especially for those generated by liquidity issues, the enterprise risk involves several stakeholders. In the past, in Italy, there has been a shift of risk from equity to debt involving creditors in a role that did not belong to them and leaving them the decisions on the company’s destiny. The effects of the current crisis will probably be assessed only in a few months. However, it is estimated that by the end of 2020 new impaired loans will emerge for an amount of 100-120 billion euros, almost equal to the total exposures held by banks.Firms losses in FY20 could deriving from the effects of the lockdown, the “historical problems” and also due to the mechanism for assigning the rating / support by the banks. The “shift of risk” to other financial operators, such as funds and servicers, changing the legal entity, could increase the possibility of financial injections, and could allow significant support to Italian firms.A proactive vision can expect the increase of the numbers of operators as well as the specialization of them and of the professionals by sector and by size of debt or investment, also in support or in collaboration with the major funds that relate with credit institutions for mass purchases. This would allow greater competence to support all companies, creating the conditions for the generation of value and adequate returns.3 July 2020
SMEs key role for growth One of the most debated topics in these times concerns the lack of firms liquidity caused by the lockdown. Liquidity is crucial to guarantee payments and, in many cases, business continuity, allowing the maintaining of an acceptable level of employment rate. For these reasons, several measures are being implemented by the Government to introduce liquidity into the economic system. Critical points are mainly related to allocation modes and choices, as well as the total amount needed. Accordingly, the scarcity of financial resources necessarily entails a selection process of companies worthy of support based both on the analysis of financial and industrial ratios.
The latter are fundamental if we consider that Italy is a manufacturing country mainly made up of SMEs. Entrepreneurs need to be supported from a managerial and industrial point of view, allowing them to focus on their business and to follow the new technology and logistics trends generated during the lockdown, leaving to other entities the management of working capital issues (such as supply chain agreements, the structuring of participative financial instruments between companies and online factoring).
A further contribution can be provided by different investment structures such as private equity funds – turnaround, club deal and servicer. At the same time, given the industrial characteristics of Italy, there is a clear need for the development of an infrastructure network that creates a favorable competitive environment. In conclusion, the recovery of the Italian economic system will be defined by the competitive and development capacity of SMEs supported by all stakeholder, especially from an industrial and managerial point of view.9 June 2020
Report: verso gli stati generali18 May 2020
Il Prezzo del virus16 May 2020
Business Combinations? Much faster with partecipative financial instruments The need to develop business combinations emerged in the context of “#RipartItalia, 100 ideas for recovery”, organized by Class Cnbc. These processes are realizable, but may have problems related to their duration. For example, an M&A process requires a medium-long period that is too long for business continuity in current circumstances. In Italy there are companies in crisis with difficulties in accessing bank credit, but there are also companies that have good financial strength. These companies can help the economic recovery by supporting business continuity of their network, supply chain or complementary ones.
In order to achieve this goal, various financial instruments already exist, such as participative financial instruments. The advantages for issuing and subscribing companies are the following: a) rapid obtaining of financing; b) more time to overcome the current difficult moment; c) integration with a solid company, without losing its corporate value; d) helping companies deemed strategic; e) obtain a good return on the investment made; f) obtain constant monitoring of the investment and the issuer through administrative rights; g) have more time to evaluate and carry out aggregation processes (such as M&A).
This situation improves relations between companies of different sizes and belonging to the same sector, creating more collaborative relationships and bringing commercial, social, strategic and financial advantages.
Continuing your business within a larger group is better than letting it extinguish.29 April 2020
SME financing, the responsibilities of the directors In the current debate on corporate finance related to the Covid emergency 19, we believe that particular attention should be paid to the risk and liability profiles, both on the banks and on the corporate side. The Legislative Decree of 8 April 2020 does not provide for interventions regarding bankruptcy crimes, although a period of suspension of bankruptcy claims is foreseen. There is therefore an issue of management’ responsibilities in accessing these funds. For the typical entrepreneurial optimism, the tendency will be to make an immediate request for credit lines in the hope that these measures will be sufficient to resolve the crisis, having as a premise a quick restart. It is necessary to pay attention to the company situation before deliberating the request for financing, verifying, as far as possible, the ability to satisfy this debt together with past liabilities, in order to avoid any future liabilities. A legislative intervention would have an immediate application, however, the provision of a “tout court” waiver could lead to a distorted use of the derogation. The idea of a limited treasury plan (12 months) subject to certification by a third-party expert could be of useful help in this situation. This approach will allow to postpone the completed evaluation of the Plan and the most appropriate support measures. The speed of realization of this approach could be favored by 1) conceding (if not already done) of a moratorium on current loans, effectively granting a certain period of time to carry out what has been described; 2) greater information exchange between financial institutions aimed at spreading knowledge on the status of the companies being financed or risk sharing in order to speed up the decision-making process. - + 2019
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6 November 2019
The hard release of companies in crisis: the aim to rescue distressed firms does not seem to deviate over the time. Banks are involved requesting financial and decision-making support, given that firms going concern passed through their choices. So far, the dynamics of corporate crisis resolution procedures have been oriented towards the postponement of the appropriate solution to the problem.In recent times, banks are moving to a) sell NPL and improve asset quality, b) avoid the form of new NPL loans. With regard to the credit disposal, single name / supply chain UTPs procedures now involves new players, such as private debt funds. This allows banks to “return” to do banks, shifting the decision-making role into funds.The companies that are still tied to a crisis resolution processes can now have the chance to exit. In 2012 we anticipated that the entrepreneur should change his relationship with financial institutions in analogy to what happened in private equity processes. Today, based on the entry of private debt funds, this approach is even more significant. Given that the objective of the funds is to enhance their investment, instead of passive approach, entrepreneurs should work proactively in managing their debt, to plan the “way out” of the fund and therefore the redemption of its company.The operational phase, characterized by rapidity of execution and multidisciplinary skills, will take on greater importance, supported by professionals who, in these years, have developed their own experiences and competences in this field, independently and with a business approach.5 September 2019
REPORT giovedi blocco 1 19.09.2019
REPORT giovedi blocco 2 19.09.20193 June 2019
PROGETTO ITALIA E CHOC FISCALE3 June 2019
GIUGNO AL VIA, LINEA DIFENSIVA GLOBALE - + 2018
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13 December 2018
Innovations in the bankruptcy codeIn recent times many people often talk about the reform of Italian bankruptcy code and, in particular, the lack of a sufficient number of professionals in comparison with the needs. However, rather than the number of professionals, we need to look at their skills and acquired experiences. In fact, over the last ten years, specific professional skills in the various roles and stages of the crisis of companies have been developed. The expertise acquired in bankruptcy proceedings is different from that one relating to “going concern” activities (restructuring agreements and plans). It’s useful to develop a system for identifying, within professional categories, who is the most suitable to support companies, in accordance with their role and stage. Therefore, since the professional profiles already exist, broadening the knowledge to other professionals, in particular younger colleagues, should not be a problem if addressed through the “learning by doing” approach. The same consideration holds true as regards the increase in the number of statutory auditors. Since in smaller companies the auditors have a different and more extensive approach, it’s necessary to create a transition mechanism, based on the “learning by doing” among different levels of experience.18 October 2018
Integra World Wide Conference 2018: more than 300 professional advisors, from all over the world, will participate at Integra World Wide Conference in Florence, 18th-20th October.It is The main topics of discussion will be: IT security, cyber currency, blockchain and banks’ financial situation. Among others, speakers will be Mr Scibetta- President of Integra International, Mr. Moulin – President of ABL and Mr Kirby who represent CII (Counsil of International Investigation). All Italian members of Integra will partecipate in the event, including PGS Consulenti/Studio Papa. Mr Papa will expose in particular the Italian market opportunity in Cross Border M&A and UTP / “Single Name” Acquisition.11 giugno 2018
Dal G7 alla Bce: piu’ Dazi, meno QE?21 March 2018
It is more effective for banks to sell Utp credits to specialized operators than continuously write-down them
Recently the banking system has been involved in the significant disposal of Npl. Today the focus is on Utp (Unlikely to pay) loans, namely credits deemed difficult to recover. The Utp loans market is worth about 100 billion euro. In order to avoid the transition of Upt to Npl, it is necessary to act. In this context it is worth to evaluate the trade off between managing and selling Utp. It is believed that the disposal processes will be preferred in the future also considering that the management of Utp has not yet led to the expected results. In fact, about 40% of the restructuring agreements have ended after four years with companies in wound up or bankruptcy proceedings. An efficient and timely sale of the Utp allows to achieve a better profitability. The tendency of the banks is to reduce the incidence of Npl on the total through an increase in coverage. However, the increase in coverage does not solve the problem, rather it makes it heavier.The value of Utp, given the underlying distressed companies, highlights the need of managing the company in a specialized and timely manner. It will therefore be difficult to sell Utp loans as a whole, while the disposals of a single debtor company (single name) or limited aggregations (for the same sector or production chain) will be the best way to deal with Utp loans, also in terms of greater valorization for banks. The process of Utp disposals, presumes an effective relaunch / restructuring of the companies involved. Therefore, specialist skills are required both in terms of corporate restructuring and credit management. Recently, investors interested in this activity range from entrepreneurs who want to invest in complementary distressed companies, to national or international funds and investment banks, that are raising funds in order to run these activities, up to Spac aimed at managing Utp. This is an opportunity that banks can not lose in order to monetize substandard loans and get back, after years of managing corporate reorganization processes, to play their role as credit managers.20 March 2018
Risanamento, Intesa and Unicredit Board of Directors lists
The following lists of candidates have been received by Risanamento on March 19, 2018 for the appointment of the Board of Directors to be submitted to the next Risanamento Shareholders’ Meeting called for April 13, 2018 (with a second call convened for April 16, 2018). LIST 1 – Intesa Sanpaolo, owner of 48.9% of the ordinary shares, presented the following list: 1. Claudio Calabi, 2. Giulia Pusterla, 3. Giancarlo Scotti, 4. Antonia Maria Negri Clementi, 5. Guido Croci. LIST 2 – Unicredit, owner of 22.231% of the ordinary shares, presented the following list: 1. Franco Carlo Papa29 January 2018
January 2018, Toro scatenato27 January 2018
Milan: important dinner to discuss the debt refinancing
In a renowned Japanese restaurant in the center of Milan was held the operative/executive meeting between Han Li, Marco Fassone and two other members of Milan’s Board of Director: the Lawyer Roberto Cappelli and the Manager Marco Capuano.The new element is represented by the attendance of Franco Carlo Papa, President of the Audit Board and President of the consulting firm PGSConsulenti, specialized in corporate debt restructuring. The presence of Mr.Papa is connected to the financial side of the club and to the refinancing of the Elliott debt (303 mln), that will have to be paid backwithin October2018; specifically, the possibility to work with the Investment Bank BofA Merrill Lynch was discussed in order to find the right investor, in lightof the withdrawal of the fund Highbridge’s proposal.26 January 2018
Milan: important dinner to discuss the debt refinancing
In a renowned Japanese restaurant in the center of Milan was held the operative/executive meeting between Han Li, Marco Fassone and two other members of Milan’s Board of Director: the Lawyer Roberto Cappelli and the Manager Marco Capuano.The new element is represented by the attendance of Franco Carlo Papa, President of the Audit Board and President of the consulting firm PGSConsulenti, specialized in corporate debt restructuring. The presence of Mr.Papa is connected to the financial side of the club and to the refinancing of the Elliott debt (303 mln), that will have to be paid backwithin October2018; specifically, the possibility to work with the Investment Bank BofA Merrill Lynch was discussed in order to find the right investor, in lightof the withdrawal of the fund Highbridge’s proposal. - + 2017
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22 December 2017
Stefanel SpA has appointed the new board of auditors
Stefanel SpA has appointed the new board of directors and board of auditors. Franco Carlo Papa has been nominated as a member of the board of auditors25 October 2017
Well done the new bankruptcy law, but why excluding large companies from crisis alerting system?
In order to improve the protection of creditors, the approved law envisages the obligation to report when certain parameters are exceeded. Mechanisms such as monitoring and planning will allow the company not to crash in crisis and should avoid an external subject to enter in the solving problem business process.In addition, the new bankruptcy law excludes large companies from activating alert procedures and reporting obligations. Nowadays, it has been developed a consolidated system consisting of subjects now able to managing business crises professionally. However, this choice does not impose reporting obligations on qualified public creditors and their control bodies.24 August 2017
Big old guys look. Who will be the heir of Guido Rossi
The article (Il Fatto Quotidiano newspaper) reports Franco Carlo Papa in the list of profiles of leading Italian experts.8 July 2017
Ratings to the bailout
The article (Milano Finanza newspaper) deals with a poll result about the main banking restructuring operations in the last 2 years, in which Franco Carlo Papa, among others, is part of the panel.9 May 2017
The fund Idea Ccr takes Sinterama control
The article (Milano Finanza – sezione Mercati newspaper) deals with Sinterama S.p.A. debt restructuring plan certificated by Franco Carlo Papa as independent expert. Sinterama is European leader in the production of coloured polyester threads and yarns, with total revenue of 135 million Euros.29 April 2017
Parmalat, closed investigations into the Lag case
The article (Gazzetta di Parma newspaper) deals with the shareholders’ meeting of Parmalat in which Franco Carlo Papa was appointed member of the new Board of Statutory Auditors.28 April 2017
CPL restructures debt
The article (Milano Finanza newspaper) deals with the CPL Concordia debt restructuring through an agreement signed in compliance with ex art.67 L.F., based on a financial and industrial plan certificated by Franco Carlo Papa as independent expert. CPL is one of the major players in national energy services (energy management, photovoltaic system, natural gas-fuelled cogeneration etc..) with a consolidated value of production of 371.1 million Euros. - + 2016
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24 December 2016
Champions of 2016
The article (Milano Finanza newspaper) resumes the results of a survey on the best Italian managers and entrepreneurs in 2016. Franco Carlo Papa is part of the panel.19 December 2016
FS Sistemi Urbani Chairman Franco Carlo Papa speaks at a workshop on the future of brownfield sites
Series of articles on the workshop “Railyards and the new city” organised by FS Sistemi Urbani — the property management arm of the national railway group — with the Municipality of Milan. The event aimed to imagine the city of tomorrow, taking as its starting point railway brownfield sites. Participants included the Chairman of FS Sistemi Urbani Franco C. Papa. One of the most interesting projects, “Circle line” by Trenord, connected the most used public transport systems with seven disused railyards forming the heart of an urban transformation project in Milan to reconnect the city centre with the outskirts.27 October 2016
Papa: Increasing interest in companies that have rediscovered their DNA
Interview with Franco Carlo Papa in which he reflects, as a professional expert in the field of company restructuring, on a recent and successful trend that has seen renewed focus on core business and a move away from merely financially-based attempts at expansion. Market analysis provides an ever greater number of instances of medium-to-large companies that have come back from the brink of disaster to concentrate on doing what they know best, in the process restoring their appeal to Italian and foreign funds.8 October 2016
Chiarini at the helm of Manutencoop
The article (Milano Finanza newspaper) reports the appointment of Franco Carlo Papa in Manutencoop board of directors. Manutencoop is the leading Italian Integrated Facility Management operator, serving public and private customers for properties, the environment and in support of health care services, with a Consolidated turnover of 955.7million Euros and a Consolidated EBITDA of 93.1 million Euros.27 July 2016
DLA Piper, KPMG, Pedersoli and Studio Papa involved in Enerpoint reorganisation
This article deals with the reorganisation of Enerpoint, underlining the role of the Studio Papa, which drew up the report certifying the agreement.21 June 2016
PGS Consulenti assists the Gruppo Giochi Preziosi in debt refinancing
The 2014-2015 financial statements of the Gruppo Giochi Preziosi ended a long series of negative results, stabilising the group’s economic and financial situation and restoring the trust of the banks. A key factor in this turnaround was refinancing of debt amounting to 140 million euro, assisted by PGS Consulenti.3 March 2016
Gas market still trapped between new models and old problems
This article provides economic analysis of the outlook for a gas market currently overshadowed by several negative factors. In Europe the level of reserves is high with only moderate demand, while in Asia decisions regarding the type of technology to be used for electrical power generation are an important factor. The first signs of oversupply are also beginning to show in Asia, and unless oversupply issues can be resolved, there could be convergence between the three main global markets (Asia, Europe and American) with a consequent drop in gas prices. - + 2015
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3 December 2015
Lack of planning in corporate decision-making and improvement of rating
Luca Sala and Marco Grappa (Partners of PGS Consulenti) underline the need to implement an appropriate system of financial planning as part of ordinary company activity and not just in times of crisis. Furthermore, clear reporting procedures might improve the correspondence of balance sheets to budgets. This is also important for periodical rating reviews.19 November 2015
When is company recovery over?
This article by Luca Sala and Marco Grappa (Partners of PGS Consulenti) highlights the fact that, in the case of plans under Article 67 of the Bankruptcy Act, recovery has been clearly achieved when all debtors have discharged their obligations or on expiry of the term of the business plan. Recovery may also be deemed to be complete even prior to expiry of the plan where it is judged that the financial situation has stabilised following positive events.1 October 2015
The new Italian valuation principles should also be used for equity instruments
Franco Carlo Papa (Chairman of PGS Consulenti) underlines the need for valuation experts to consider all privileges, including capital or administrative rights, in order to provide a proper estimate of the value of equity instruments. The existence of privileged capital rights, as indicated by the new Italian valuation principles (PIV), leads to a non-proportional distribution of the flows generated by the company between the different categories of instrument and of asset value following a liquidity event.15 September 2015
How the new Italian valuation principles will improve transparency and uniformity
Carlo Papa (Chairman of PGS Consulenti) highlights how valuation, as provided for under the new Italian valuation principles (PIV) that will come into force on 1.1.2016, must be founded on the following requirements:
– Rationality – the estimate must follow a rigorous and convincing logical model;
– Verifiability – the valuation process must be reconstructable and be based on reasonable premises and reliable and authoritative sources;
– Coherence – correspondence between information, aims of valuation and results achieved;
– Reliability – objectivity of data, discretion on the part of the expert performing valuation being limited as much as possible.10 July 2015
New Article 182 of the Bankruptcy Act speeds things up but reduces confidentiality
This article by Marco Grappa and Luca Sala (Partners di PGS Consulenti) underlines how Article 182-septies aims to encourage achievement of the majorities provided for under Article 182-bis, allowing possible disagreement between credit institutions. The new majorities might in future replace current procedures in accordance with Article 67, which however, being private in nature, do not require court intervention and ensure a greater degree of confidentiality in relation to customers and suppliers.26 June 2015
The delicate task of the independent expert in company crises
Franco Carlo Papa (Chairman of PGS Consulenti) examines the ever larger burden of responsibility placed on the independent expert who is increasingly seen as the guarantor of bankruptcy procedures. The independent expert must strive for a balanced mix of accounting and corporate concerns, focussing on the task of providing an opinion on a plan following professional and independent certification process.18 June 2015
Article 182-bis and the excessive misalignment parties and non-parties to agreements
This article by Franco Carlo Papa (Chairman of PGS Consulenti) highlights how the debt restructuring agreement alters the par conditio creditorum: creditors who are not parties to the agreement gain privileges over signatories. Those not signing the agreement must be paid in full within 120 days, an attractive option given the current payments situation in Italy.6 June 2015
Reorganisations: how to exit the tunnel
An interview with Franco Carlo Papa (Chairman of PGS Consulenti) in which he underlines that the arrangement with creditors is still the most used tool, even if larger companies tend to prefer recovery plans under Article 67 of the Bankruptcy Act, given the absence of public disclosure requirements. The greater need for debt reduction could see a rise in the number of debt restructuring agreements under Article 182-bis of the same act. To date the improved the economic environment has not been reflected in restructuring processes, although its effects might be felt in a few years’ time.5 June 2015
New offence of fraudulent accounting in force from 14 June 2015
This article by Marco Grappa (Partner of PGS Consulenti) examines the new offence of fraudulent accounting (for listed and non-listed companies) involving wrongful inclusion or omission of material facts that would tend objectively to mislead others. These offences are classified as “crimes of danger” rather than “crimes of damage” since it is no longer necessary to demonstrate that loss or damage has actually been caused by such unlawful accounting methods. - + 2014
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22 February 2014
Distressed M&A
Hosted by Unicredit, Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti), together with the DLA Piperteam made up of Partners Antonio Lombardo and Alberto Angeloni, tackled the broad question of Distressed M&A. After a detailed analysis of the specifics of crisis resolution procedures, the role and duties of the independent expert were examined in an attempt to set the process in its context. The distinctive features of Distressed M&A were then analysed in relation to company valuation in crisis situations, the approach of the financial institutes, critical issues, essential factors for success, as well as to timing and the preparation of contracts.3 January 2014
Companies need to adopt a new mindset to change Italian finance
Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) note how Italian entrepreneurial culture, which has always valued reserve, is hard to reconcile with the ever-increasing demand for communication, information and transparency by the banks. This is all the more important in the bank-centric Italian system. In order to overcome crisis successfully, the new challenge is to adopt an innovative model in terms of culture, governance and transparency, creating a managerial structure, in part through merger processes, that is increasingly less tied to the charismatic figure of the founder, thus contributing to the growth of the company and more in general of the Italian competitive environment. - + 2013
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16 November 2013
The role and responsibilities of the independent expert
At the second master’s course for specialisation in the new bankruptcy procedures for corporate crisis management, the presentation by Franco Carlo Papa (Chairman of PGS Consulenti) looked at the role and responsibility of the independent expert. Following a brief introduction on the origins and aims of this role, general and individual professional requirements were examined, together with a detailed analysis of relevant civil and criminal liability. Using summary charts and a description of the principles and guidelines to be followed, the activities required of the independent expert were described, with the help of some practical examples, in relation to truthfulness of data, feasibility of the plan and other specific assessments (such as the viability of the agreement and best deal for creditors).14 November 2013
New investors and M&A: the future for companies that have survived the crisis
This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) analyses the conditions necessary for restoring company competiveness through consolidation processes in the current crisis environment. Detailed attention is given to the conditions for developing: 1) business valuation, 2) processes of concentration, 3) debt adjustment, 4) new forms of borrowing. Indeed such new forms of borrowing need to be tested to overcome or at least mitigate the current bank-centric system.23 October 2013
Greater focus on competences and synergies rather than multiples needed in M&As involving companies in crisis
This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) examines the opportunities for development involved in M&A processes during crisis situations, seen as important for restoring competitiveness to the Italian system. Close attention is given to the possible roles of creditors (the main promoters of company recovery), of the professionals providing assistance to companies during these operations and of turnaround funds. In these situations it is therefore fundamental to concentrate on synergies and competences rather than simply on purchase prices, both in the acquisition phase and in the later corporate management phase.20 August 2013
One of the effects of the crisis is a need to review the lending system
Article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) on the issue of bank lending, which until the start of the crisis tended to focus on returns and which now, following the company reorganisations of the last five years, tends to prioritise protection of credit through support for business continuity. It is therefore expected that in the future the banks will adopt a different view on lending, based more closely on actual company dynamics, also with a view to reducing the sort of asymmetries between the banks and companies that all too often feature in procedures for company crisis resolution.8 August 2013
The “blank” arrangement is a good idea but some aspects need to be fine-tuned
Following the introduction of the “blank” (or “with reserve”) arrangement with creditors, Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) examine the positive and negative aspects of its practical implementation. Several requests have already been received only a few months after the introduction of the new measure. However, in many cases it has simply been used as a means of delaying bankruptcy. This has led to legislative amendments such as the option of immediate appointment of a commissioner and periodical disclosure requirements. The authors examine the pros and cons of the recent measure, also suggesting a new way of reaching agreement between companies and creditors.16 July 2013
To get help from the bank, a company must have a clear long-term strategy
Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) see strategic and financial plans as essential common tools for exiting the crisis, ending the vicious circle that is hampering economic development. The plan is used as the central valuation tool for supporting business continuity in most of the crisis resolution procedures examined. It should therefore also become the tool generally used by companies to provide accurate strategic and financial information benefitting all stakeholders, including the banks, allowing better assessment of creditworthiness and company rating.11 June 2013
There will be no end to the crisis so long as Italian companies focus exclusively on control in M&As
This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) argues that current actions taken by companies to focus on core business, eliminate inefficiencies and restructure debt might not be sufficient in the current competitive environment. M&A activity is instead required, in which entrepreneurs need to abandon their obsession with control, developing a new type of cooperation across a range of areas including obtaining new financial resources.23 May 2013
The independent expert should help to find solutions instead of looking to replace the notary in company crises
Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) explain the role independent experts play in relations between the banks and creditors, where they are used by entrepreneurs and creditors for fair conduct of the negotiation process, prior to issuing their reports. The authors believe that such experts, although appointed to act autonomously, must take part in this process aimed at the social good of saving the company. On the other hand, independent experts cannot limit their function to auditing present and future accounting data, but must also carry out company-level valuation. Finally the authors ask whether the role could be expanded to cover monitoring of the plan, leading to greater involvement of the expert in assessment of actual implementation. - + 2012
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3 December 2012
How to overcome a company crisis
In this article Franco Carlo Papa (Chairman of PGS Consulenti) examines the approaches and steps required for overcoming a company crisis, stressing in particular the need for a change of mindset on the part of all those involved: banks need to move away from the “simple lender” model while entrepreneurs need to abandon their exclusive focus on profits. This would benefit both companies and society, creating a virtuous circle contributing to economic development. Indeed, recovery processes are company selection processes. The case of Xilopan is then examined as a positive example of the arguments put forward.24 August 2012
Covenants should not be the last arbiters of company survival
This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) deals with timing and other practical details of recovery agreements. The authors show that in practice a great deal of time is spent on defining components of the plans or agreements, such as covenants, on which no prior decision has been taken. Considering the requirements of company rescues and the time needed for drawing up agreements, this article argues that it is more important to focus on the process of achieving and maintaining continuity than on initial valuations. This would require introducing suitable mechanisms for defining and monitoring the plan, identifying remedies and solutions in the event of positive or negative deviations.14 August 2012
Less opportunistic approach to company crises needed from entrepreneurs and bankers
Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) examine the evident opportunism hampering the company reorganisation market, both on the part of the banks (given their role in decision-making and supporting business continuity) and entrepreneurs (especially in the approach to credit management and subsequent disclosures of difficulty). Given the need on the part of companies to adopt a clear and shared approach with all institutions, the banks are exerting asymmetric and unregulated bargaining powers, causing uncertainty as well as other issues at managerial level. A possible solution might be regulatory action aimed at fostering a fairer approach to the process of negotiation and drafting of agreements.3 August 2012
Banks should think beyond interest and fees in company reorganisations
This article by Franco Carlo Papa (Chairman of PGS Consulenti) and Luca Sala (Partner of PGS Consulenti) examines the often conflicting approach taken by banks and entrepreneurs to crisis. Banks aim to protect credit rather than fostering company meritocracy. Since they are on the frontline in company rescues, banks should go beyond providing financial support and also offer business input (a little like shareholders). Entrepreneurs, on the other hand, should focus on social responsibility, finding ways to work alongside these new partners and enhancing executive thinking to overcome the crisis affecting their company.