The Italian Chamber of Deputies has just approved a draft bill amending, inter alia, the Italian securitization law. If the text of the amendments will be confirmed by the Senate, new provisions will apply to the securitisation of “impaired” receivables (“crediti deteriorati”) transferred by an Italian bank or financial intermediary to an Italian securitization vehicle (“Italian 130 SPV”). The legislative process is due to complete by 23 June 2017.
The content of the draft can be summarized as follows:
- Combined securitisation of impaired claims and loans to the relevant debtors: in the context of the same transaction, an Italian 130 SPV may acquire impaired receivables and grant a loan to the relevant debtors to help them returning current (in bonis) and increase the collectability of the securitized receivables. In this case, the granting of loans is subject to the usual rules (i.e. identification of borrowers by a bank or financial intermediary which must retain a 5% economic interest, the borrowers cannot be physical persons or microenterprises and the noteholders must be qualified investors). It is specified that the management of (i) the receivables acquired by the Italian 130 SPV and of (ii) the loans granted by it must be entrusted with a bank or a financial intermediary.
- Increased role of securitisation vehicles in debt restructuring, composition or recovery procedures: in the context of the securitisation of claims subject to a restructuring agreement or under a composition or recovery procedure (piano di risanamento, concordato, concordato preventivo, accordo di ristrutturazione, concordato con continuità aziendale or other analogous procedures) an Italian 130 SPV would be able to: (i) purchase or subscribe the equity or quasi-equity instruments issued by the assignors for the purposes of making a debt-to-equity swap; and (ii) grant fresh new loans to the relevant debtors to help them returning current (in bonis) and increase the collectability of the securitized claims without being subject to the statutory subordination regime applicable to shareholders loans. The equity and quasi-equity instruments as well as the proceeds accruing thereunder would form part of the segregated pool of assets under the Italian securitisation law. The Italian 130 SPV would need to appoint a properly authorised and competent person to represent it and manage the relevant activities. If it is a bank, financial intermediary enrolled with the register held pursuant to Article 106 of the Italian Banking Act, investment company (“società di intermediazione mobiliare”) or asset management company, such person would also be entrusted with the task of monitoring the compliance of the securitisation transaction with the law and the securitisation prospectus.
- Use of ReoCos (or other SPVs) for the purchase of assets and leasing agreements: a SPV – separate from the Italian 130 SPV – could be set-up to purchase in the exclusive interest of the securitisation transaction: (i) real estate or movables assets securing the securitised impaired receivables, including assets leased under financial leasing agreements, whether or not early terminated; and (ii) the legal relationships arising from such agreements. The sums of money generated by the holding, management and disposal of the aforesaid assets and legal relationships would be segregated to the benefit of the noteholders and for the payment of the securitisation transaction costs. Since the SPV is an unregulated entity while financial leasing constitutes a reserved financial activity, some restrictions apply to the purchase by it of the leasing agreements (or the legal relationships resulting from their termination). In this case, the SPV must have been created for a single purchase transaction (i.e. one-off), must be liquidated at the end of the transaction and must be fully consolidated in the balance sheet of a bank. These limitations must appear from the by-laws of the SPV. In addition, the management of the leasing relationship must be entrusted with the servicer appointed by the Italian 130 SPV in the context of the securitisation (i.e. typically a bank or financial intermediary) or with another company authorised to carry out financial leasing. The SPV would continue benefitting of the same tax provisions applicable to companies which carry out financial leasing and the fixed registration tax benefits set out in the Bersani Decree (Law Decree No. 223/2006) would apply to the transfer by the SPV of real estate assets.
- No need to identify block criteria for publication of the transfer notice on the Official Gazette and Companies Register: the draft bill clarifies that the “ordinary” publicity regime applies to the receivables transferred by a bank or financial intermediary even if the receivables purchased by the Italian 130 SPV are not identified by block criteria. In this case, the transfer notice must indicate the names of assignor and assignee, the date of transfer, a summary information on the legal relationships from which the receivables originate and the period during which such relationships have arisen (or will arise), the web site on which assignor and assignee will make available the data regarding the assigned receivables and the confirmation of their transfer. The transfer of the guarantees and security interests securing the securitized claims as well as the transfer of the assets subject to financial leasing would become enforceable towards debtors and third parties simply through the publication of the transfer of the relevant receivables on the Official Gazette and filing with the Companies Register with no need to carry out other registrations or formalities.
Several provisions of the draft bill raise questions as to their exact meaning and/or implications. To make a few examples: (i) the relationship between the Italian 130 SPV and SPV/ReoCo that could be created to purchase assets and lease agreements is not clear; (ii) what is the identity and actual role of the “properly authorised and competent person” to be appointed by the Italian 130 SPV when (A) purchasing or subscribing equity or quasiequity instruments issued by the assignors and/or (B) granting fresh new loans to the relevant debtors in the context of the securitisation of claims subject to a restructuring agreement or under a composition or recovery procedure?; and (iii) are the new loans granted by an Italian 130 SPV in the context of debt restructuring, composition or recovery procedures subject to the usual restrictions provided under the securitisation law?
It remains to be seen whether the above and the other queries which the new provisions, if enacted, would raise will be clarified by further amendments to the text or, as it seems more likely today, by future market practice and legal interpretation.