The attestation of corporate turnaround plans in Italy: operating problems and possible solutions

Abstract

The manifold recent reform acts of bankruptcy law in Italy are more clearly oriented towards preserving the going concern of firms, besides granting the par condicio among creditors. Companies have broader opportunities to plan the restructuring, with the constraint of making it advantageous for creditors. In this context, the role of the independent attester is of prime and increasing importance to assure that the restructuring plan pursues creditors' and stakeholders' interests.This paper presents insights from both the authors' practical experiences and the review of the literature. It is addressed to managers, practitioners and scholars, interested in understanding turnarounds in the Italian context. The specificities of the attester's activity in analysing the data truthfulness and the feasibility of the recovery plan are deeply analysed. The article has a qualitative value and is based on a normative methodological approach, which links bankruptcy law with crisis management and auditing. The result is a systematic model of the attestation process.

Corporate crisis management in Italy: execution, monitoring and performance analysis of recovery business and financial plans

“…A graphical representation of the Delta-Performance scenarios analysis is shown in Figure 2. Sensitivity analysis e and determination of "delta performance" scenarios (Caputo and Tron, 2016) The figure described above identify both the line of the "Guard level" that the "default line". Both must be constantly monitored and need appropriate deployment.…”

“…The planning for corporate restructuring, or turnaround, assumes the role of absolute pre-eminence in the management of business crises (O'Neill, 1986;Hoffman, 1989;Sudarsanam and Lai, 2001;Rasheed, 2005;Pearce and Robbins, 2008;Caputo and Tron, 2016).…”

“…The recovery plan must highlight the company salient facts from the recent past and the most remote ones, and the most relevant circumstances which led to the crisis. The survey must cover the technical, financial and human aspects, and must also be accompanied by an analysis of the performances particularly significant to understand the nature of the crisis in which the company is exposed (Caputo and Tron, 2016). Through the interpretation of the data, emerging from the aforementioned features, the managers and recipients of the recovery plan may draw preliminary conclusions regarding the causes of the crisis, first step for a crisis management (Müller, 1985;Pearson and Mitroff, 1993;Pearson and Clair, 1998;Pang et al, 2006;Booth, 2015).…”

“…The survey must also highlight the past actions and remedies that have been implemented at the time of the crisis, assessing its effectiveness and timeliness. Once this examination has been completed, a conclusive part in which the various hypotheses based on the reconstruction actions that are expected to be implemented, including the execution time, the degree of feasibility and the presumable effects connected to them, must be formulated (Luzzana, 1986;Caputo and Tron, 2016).…”

“…The action plan and its continuous monitoring during the entire duration of the turnaround project represents an essential element for a correct implementation of the recovery plan (Caputo and Tron, 2016;Ambrosini and Tron, 2016).…”