Often entrepreneurs are in a position to no longer be able to follow the agreements made with banks or other creditors, either for the period of crisis in place, either for wrong business choices or for any other reason. In these cases it is possible to run for cover before it is too late through the institution of ‘corporate debt restructuring’.
Companies of any type (including agricultural) and size can take advantage of this institute (the individual company is also envisaged), but it is necessary that the debt exposure be such as to bring the company to the cessation of the activity.
What is it about?
This is a proposal for an agreement with which the company presents to its creditors a plan to reduce the pressure of debts and, consequently, allow the business to emerge from the moment of crisis. If the agreement is reached, it will then be entered in the business register. Given the technical times, in many cases sufficiently dilated, it is possible to draw up the agreement and, on the basis of creditors’ approval, use it to avoid the aggression of some assets belonging to the company’s assets, waiting for them to be fulfilled. the various formalities.
This act consists of a report written by an expert in which he comes attested to the veracity of the company’s economic data and the feasibility of the plan that underlies the restructuring. In this plan the methods and times of return must be specified .
The entrepreneur in a state of crisis has the faculty to request the approval of a debt restructuring agreement , but it is also essential that the creditors join the plan, reaching at least 60% of the total coverage of the debt exposure .
Creditors who do not participate (as long as they do not exceed 40%) still have the right to a full reimbursement of the credits claimed, but can not oppose the completion of the debt restructuring . The calculation of the aforesaid percentages is done on the “weight” of the credit, therefore by quota and not by “witness”.
What debts are allowed?
In general they can be included in the debt restructuring agreement:
- financial debts (for example mortgages, loans, leases, etc.) that are claimed by credit institutions;
- trade payables (to the various suppliers of goods and services);
- payables to the tax authorities (including those towards Equitalia);
- payables to INPS .
How can the debts due be extinguished?
In the restructuring plan the debtor must specify how he intends to meet his debts; can make different types of proposal, remembering that it is always the lender’s right to decide whether to accept the conditions or not.
In particular, among the various opportunities, he can propose:
- an extension of the payments due (especially with the Revenue and with INPS).
- the conversion of debts into shares and their transfer to creditors: the corresponding capital increase must be made equal to the book value of the debt;
- the transfer of assets to or to creditors. With this solution it will be necessary to carry out the transfer from the financial statements as the accounting value of the debt which will be extinguished (or reduced);
- the issue of a convertible bond loan in shares for an amount corresponding to the carrying amount of the debt.
Advantages and disadvantages
As for the advantages we can list some of them:
- creditors may decide to renounce all or part of the credits claimed, or interest accrued;
- Creditors may suspend any ongoing foreclosure actions. The suspension request is to be made to the court and is possible if a pre-agreement has already been reached with the sufficient number of creditors;
- in the period of agreement, funding can be requested to help overcome the crisis;
- compliance with the few legal restrictions for the preparation of the debt restructuring plan;
- possibility to close agreements or transactions with the tax authorities or with INPS.
- the entrepreneur can continue the management of his business;
- found the agreement can not be promoted new foreclosures or precautionary actions;
- exemption on the application of the rules that can lead to the reduction of capital due to losses and the relative dissolution of the company.
As for the disadvantages, the most important one is related only to the part of receivables not included in the restructuring that must still be paid in full. For the payment of these there are times that must be respected, namely:
- if the credits left out of the agreement have expired on the date of the restructuring agreement, the creditor will not be able to request payment before 120 days have passed;
- if they have not yet expired on the date of approval, the deadline is always 120 days but starts from the date of their expiry.
How is the procedure?
The process for the debt restructuring to be valid must follow the following steps:
- request for restructuring to the territorially competent court. For this first stage two paths can be followed: that of the ordinary agreement (filing of the application for approval of the agreement with the support of the majority of creditors) or through a proposal for an agreement to obtain the necessary time to formalize it;
- filing of the agreement and registration in the register of companies;
- hearing for the approval that serves to verify the veracity and the existence, for example, of the agreement with 60% of creditors;
Debt restructuring agreement: who to contact
To obtain a debt restructuring agreement, mediation and negotiation skills are needed to propose convincing corporate debt restructuring strategies to creditors. According to the art. 182 bis of the Bankruptcy Law the request must be accompanied by “a report drawn up by a professional, appointed by the debtor (…) on the veracity of company data and on the viability of the agreement with particular reference to its suitability to ensure full payment of foreign creditors “.
Furthermore, it is important to perform an analysis of the bank contracts at the base of the debt, to check for any critical issues, to be exploited, through a financial report, during negotiations with the creditor banks (for example, the presence of bank interest or usury ).
For this reason, to undertake a process of debt restructuring it is essential to rely on professionals specialized in the recovery of financial losses that can help the debtor with an assisted negotiation in the resolution of disputes and conclude beneficial debt restructuring agreements.
If you are an entrepreneur who can no longer cope with the debts incurred and you do not want to lose everything you have invested in … contact us and request your FREE advice by filling out the FORM BELOW!