Turnaround Strikes Again in San Siro Football Stadium

30 December 2007

The value of interim managers in turnaround situations is becoming a hot topic in Italy as well as the UK, and our sister organisation IIM in Italy is making a major contribution in this area.

After two successful short workshops, IIM in Italy organised a major conference on the turnaround perspectives in Italy on 15th November in the Executive Hall of the famous San Siro football stadium, which is jointly home to Milan’s two main football teams and two of the best teams in Italy’s Serie A football league, AC Milan and Internazionale. More than 100 people participated in the conference, which was jointly presented with ANDAF, the Italian CFO association, and the Media Partner was Il Sole 24 Ore’s business magazine L’Impresa.

The trigger for the conference was the new Italian bankruptcy law, which is expected to have a very positive impact. The conference examined the new law from many different perspectives.

The conference concluded that the potential for Italy is very interesting: a huge new market is opening (about 400 potential targets among enterprises in the 30-60 million Euros league). The challenge is that there is a substantial skill shortage of experienced turnaround managers in Italy, compared to the great number of specialists in bankruptcy proceedings.

More and more interim managers will be needed: the law has created the pre-conditions, and ongoing institutional activities with all the relevant stakeholders (banks, Private Equity funds, managerial and entrepreneurial associations, central and local administrations) will be needed so that the expected potential can become reality.

Maurizio Quarta, National Coordinator of the IIM Italian Chapter, addressed the human resources dimension and the assembled panel of distinguished speakers addressed the new law and its implications from a number of different perspectives.

The new legal picture was detailed jointly by Maria Rosaria Grossi, Deputy Chairman Bankruptcy section - Milan Court (a subject matter expert) and Giuseppe Amoroso, prominent lawyer and consultant on Tax & Legal matter to AIFI (Italian PE and Venture Capital Association).

They pointed out that there has been a major conceptual shift in the law. The change from a single focus on insolvency/bankruptcy to crisis management prior to this stage, in fact implies expanding the application of new instruments to support enterprises at this point, in order to help prevent the further worsening of their economic condition.

Secondly, the main recovery instruments now available were analysed. These include the Recovery Plan and “Re-Balance” (of the financial situation), plus the Settlement with Creditors before bankruptcy (the Concordato Preventivo) which is expected to be the most commonly used crisis recovery instrument. A major change vis-à-vis the old law, is that all the payments, actions and guarantees granted by virtue of a Recovery Plan drafted by an auditors’ association or an auditing company cannot be revoked, should the plan not be successful and the company declared bankrupt afterwards. The Plan is definitely a “private fact” with the exclusion of any external control such as a judge or creditors.

In the Settlement with Creditors, the contractual nature has been enhanced, so diminishing the control exerted by the procedural bodies. The restructuring of debts and payment terms can be reached through whatever judicial means agreed with different categories of creditors (another great novelty of the law). The new law guarantees to the turnaround specialists, independent managers or specialised firms, the possibility of intervention immediately after the organisation’s financial difficulties are clear, without any additional risk in case of a later bankruptcy.

The Private Equity perspective was given by Marcello Gallo, CEO of I2 Capital (listed company specialising in Special Situations business) and Partner of the I2 Capital Partners Fund. His presentation gave more insight on the practical implications of the new law and has particularly stressed the importance of the human resources factor.

Generoso Galluccio, CEO of I.B.S., concentrated on the technical analysis of a turnaround case in a SME. There was considerable interest in the international perspective which was addressed by Karl - Christian Schweyer – Vice President Arques Industries AG, a listed German company specialising in the acquisition of distressed businesses and planning international expansion into Italy, Spain and UK.

Maurizio Quarta
IIM - Italian Chapter
mq@ioim.it