The Negotiated Settlement of the Crisis and the Cash Flows of Large Unlisted Italian Companies

Abstract

Purpose:The recent introduction in Italy of the negotiated settlement of the crisis represents further progress towards the creation of useful tools to counter the failure of illiquid or close to insolvency companies. Access to the negotiated settlement of the crisis and the outcome that can result from it are strongly connected to the financial situation of the company. The purpose of this research is to analyze the financial situation of large unlisted Italian companies, in order to verify the advisability of using the new institute and the depth of the consequent management interventions. Design/Methodology/Approach: The research used the methodological scheme referred to in the Decree of the Ministry of Justice of 28 September 2021 to identify which variables were relevant for the purposes of accessing the procedure of crisis' negotiated settlement. The variables thus identified were analyzed according to the statistical method both in the year 2020, which experienced the exceptional nature of the pandemic shock, and, for comparison purposes, in the previous four years. Findings: The research has highlighted how the majority (53%) of the companies observed showed substantial economic stability and considerable financial resistance to the crisis. Furthermore, based on data for the financial year 2020, it was estimated that the number of large Italian companies potentially interested in the new institute of crisis' settlement is around 400, out of a total of over 900 companies. Practical Implications: The analysis scheme developed by the research can represent a useful tool for verifying the potential of the new procedure of crisis' negotiated settlement and can also be applied to the study of specific sectors or to small and medium-sized enterprises. Originality/Value: The originality of the research consists in having adapted the individual practical test provided for by the Law Decree of 24 August 2021, no. 118, to obtain an analysis tool applicable at an aggregate level.