How to avoid a massacre of companies due to Covid
Linda Morellini, a lawyer who deals with business crises, analyzed the dangers connected to the various Dpcm that risk holding up deceased companies and the limits of the new Crisis Code (whose entry into force has been suspended for the moment)
After the lockdown and the obstacle course determined by the second wave of the pandemic, will companies really be able to restart? And what needs to be done to prevent the new emergency tools, designed to protect the entrepreneurial fabric, end up keeping companies destined to go out of business even under normal conditions?
In anticipation of a considerable increase in the insolvency of businesses, the measures issued to date have attempted in various forms to support the business world, also by simplifying the tax collection (Law 120/2020) and by granting the possibility of installments without provision of penalties and interest, as well as the extension of the terms for the payment of income taxes or IRAP for companies that have suffered a decrease in turnover of at least 33% in the first half of 2020 compared to the same period in 2019 (Legislative Decree 30 September 2020 157). Alongside these measures is the reform dictated by the Crisis and Insolvency Code (the "Code").
Born after a long gestation (from 2017), the Code, following the pandemic, will come into force on 1 September 2021.
Certainly an organic reform of the insolvency procedures (with the exception – unfortunately – of the extraordinary administration) was necessary. The Code presents valuable ideas such as, the obligation for the company to adopt adequate organizational models to prevent the crisis, the discipline of the insolvent group with the "institutionalization" of the compensatory advantages to allow intra-group transfers, the coordination between insolvency procedures and criminal precautionary measures.
However, there are many unsolved aspects and many shadows that become even more imposing in the face of the ongoing health emergency.
In fact, the Code does not facilitate the arrangement in continuity and substantially makes it impossible to resort to the settlement arrangement, it says nothing about the possibility of partially satisfying the privileged creditors, it leaves little room for negotiation between debtor and creditors, a negotiation that in crisis contexts appears fundamental for the better safeguarding of corporate values and incorporating protective tools through the peremptory passage to pre-established bodies.
If the pandemic has had a significant impact on healthy businesses, it has even more so on businesses already in difficulty which therefore, more than the former, need support, especially where the pandemic has occurred at the beginning of a path of remediation or renovation.
Currently it does not appear that the "emergency legislation" supports the company in crisis in this sense, nor in the part in which it can lead to "irresponsible credit disbursements" which, if not included in a specific path, are only intended to aggravate the debt , nor through the provisions contained in art. 6 of the Liquidity Decree. In fact, the unclear wording of the law made its application uncertain and required the Notary Council of Milan to specify with the maximum 191 that the suspension of the obligation to reduce the capital to cover losses applies regardless of what the reference date of the financial statements or of the interim balance sheet from which the losses emerge. But above all, in order to be able to support, especially ex post, the validity of this exemption, it will be necessary for the administrative body to be able to justify in the meeting, the possibility of applying this provision as the prospect of continuity in equilibrium exists for the following years.
What the company in crisis really needs is the possibility of starting a quick, non-bureaucratic procedure that, through the application of clear and simple legislation, achieves the objectives of the reorganization also through the recognition of the legitimacy of agreements with creditors, with the consequent penalties, capable of guaranteeing credit expiration extensions and / or suspension of executive and / or executive procedures and / or even new finance, all within a process that should always be supported by the presence of specialized independent experts and, depending on the severity of the crisis, monitored along the lines of what was, for example, the procedure – now repealed – of the receivership.
As has already been authoritatively argued (Vittorio Minervini), perhaps in a pandemic era we should no longer refer to insolvency, but rather to "rehabilitation", distinguishing between companies that, although technically insolvent, still have the conditions to be remedied and to become profitable in a medium-long term perspective.
To carry out this assessment and identify the most suitable protective tools for recovery, professional profiles of great competence, experience and balance are needed who, together with the professionals who assist creditors, know how to combine their professionalism in order to achieve the maximum enhancement of the values of enterprise in the common interest of creditors and the enterprise itself.
Profiles that the legislator of the Code seems to forget when, not only does it reduce the requirements to be admitted to the register – already variously composed – of pre-established subjects for management and control in protective procedures, but even a) subordinates the pre-deductibility of the remuneration of the professional, in any case within the limits of 75%, upon the achievement of a certain result and b) excludes the recognition of the pre-deductibility of professional credits for services rendered on assignment by the debtor to subjects other than the Company crisis composition body during the alert procedure and assisted settlement of the crisis.
Who knows if the Black Swan (as Nassim Taleb defined Covid 19) will offer the opportunity to learn how to offer companies effectively useful and effective tools to deal with the crisis. For now we have not succeeded.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/crisi-imprese-covid-19/ on Sun, 20 Dec 2020 06:40:08 +0000.