On June 15, 2017, the Italian Parliament approved Draft Law No. 2853, converting Law Decree No. 50/2017 and amending, inter alia, Law No. 130/1999 (the "Securitisation Law"). The purpose of the amendments is to simplify and incentivize the securitization of receivables qualified as “impaired” (crediti deteriorati) (NPLs) originated by Italian banks and the so-called “106 financial intermediaries” (intermediary finanziari, i.e. financial companies that are registered in the Financial Intermediaries Registry under art. 106 of the Italian Consolidated Banking Act, Legislative Decree no. 385/1993, “TUB”).
Granting of loans to assigned debtors
Following the entry into force of such amendments (i.e. after the publication of Law no. 2853 in the Italian Official Gazette) securitization SPVs shall be allowed to grant loans to the assigned debtors (other than physical persons and micro-companies) within securitization transactions entailing the assignment of NPLs by banks or 106 financial intermediaries for the purposes of enhancing the possibility of their recovery and supporting the assigned debtors in returning in bonis. Such possibility is subject to the occurrence of the conditions that are generally applicable to the granting of loans by securitization SPVs, and namely:
a) the borrowers are identified by a bank or by a 106 financial intermediary on the basis of the same procedures and criteria that apply in connection with their ordinary lending activity;
b) the notes issued by the SPV in order to fund the loans are addressed to qualified investors; and
c) the bank/financial intermediary identifying the borrower under letter (a) above retains, on an ongoing basis, a material economic interest which shall not be less than 5%, in accordance with art. 405 of the CRR (Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms) and respective implementing regulations.
Where the assigned debtors are carrying out debt restructuring through restructuring agreements entered into with the assignor, or composition or recovery procedures (piani di risanamento, concordato, concordato preventivo, accordi di ristrutturazione, concordato con continuità aziendale) in accordance with Articles 124, 160, 182-bis e 186-bis of the Italian Bankruptcy Law, Royal Decree no. 267/1942 (or other similar procedures), securitization SPVs may also purchase or subscribe shares or other equity financial instruments deriving from the debt-to-equity swap of part of the receivables of the assignor in order to grant loans and support the assigned debtors in returning in bonis, so improving the chances of collection of the assigned receivables. In this case, in derogation to the ordinary regime, the SPV’s receivables deriving from the loans will not rank after third creditors, in derogation to the ordinary regime generally applicable to shareholders’ loans granted in a situation of financial distress.
SPVs for the management of assets securing the assigned receivables
Additionally, it will be possible to establish a further vehicle whose special corporate purpose is purchasing, managing and increasing the value of real estate, registered movable assets and any other asset which is subject to security rights in order to guarantee the assigned receivables within a securitization transaction (including the assets subject to ongoing or terminated financial leasing, with or without the relevant lease agreements). Of course the sums obtained in connection with such management activities shall serve the purposes of repaying the noteholders and the relevant securitization transaction costs.
Simplified publicity regime for assignments of receivables that are not identifiable as a pool (in blocco)
Finally, by virtue of the amendments under examination, also the assignment by banks and 106 financial intermediaries of NPLs that are not identifiable as a pool (in blocco) under art. 58 of TUB will benefit from the simplified publicity procedure that is currently granted only to assignments of receivable that are identifiable as a pool (in blocco). Therefore, in derogation from the ordinary regime (notification of the assignment to each debtor through a notice bearing a date “certain at law”, data certa), it will be sufficient to publish the notice of assignment in the Companies’ Registry and in the Official Journal, in accordance with the requirements set out under art. 7.1, para. 6 of the Securitization Law in order for it to be enforceable against the assigned debtors and third party assignees, as well as to transfer the relevant security rights to the SPV. This would also trigger benefits under a tax perspective, as it will not be necessary to make annotations in the relevant registries (e.g. land registry) in order to record the assignee as a beneficiary of the security rights.