185000000 IT Holding Finance SA

The following restructuring and bankruptcy alternatives are available under Italian law for companies facing
financial difficulties:
• Restructuring outside of judicial process. In Italy, restructuring generally takes place through the formal
judicial proceedings because of the more favorable conditions for the debtor and the fact that informal
arrangements put in place as a result of a non-judicial restructuring are vulnerable to being reviewed by a court
in the event of a subsequent insolvency and possibly challenged as voidable transactions. However, in cases
where a company is solvent, but is facing financial difficulties, it may be possible for the company to enter into
an out-of-court arrangement with its creditors (concordato stragiudiziale), which may safeguard the existence
of the company.
• Court-supervised pre-bankruptcy composition with creditors (concordato preventivo). Prior to a declaration of
bankruptcy, an insolvent company may seek a court-supervised arrangement with its creditors (concordato
preventivo), in order to avoid a declaration of bankruptcy and the initiation of liquidation proceedings. Only the
debtor can request a concordato preventivo, which requires the approval of the company’s shareholders, a
majority (both in number and amount of claims) of the debtor’s unsecured creditors and the court. During the
pendency of concordato preventivo proceedings all actions by creditors are stayed. The composition
arrangement governing the company’s restructuring must provide for sufficient guarantees for the full payment
of secured creditors and at least 40% of the claims of unsecured creditors or the transfer of all of its existing
assets, other than those of a personal nature, to its creditors provided that on the basis of the evaluation of such
assets, it could be deemed that the secured and unsecured creditors will be paid in the percentages described
above. During the implementation of the arrangement, the company is managed by the debtor but under the
surveillance of an official appointed by the court, and under the supervision of the court. If the concordato
preventivo fails, the company will be automatically declared bankrupt by the court and enter bankruptcy
(fallimento) proceedings (described below).
• Court-supervised temporary controlled administration (amministrazione controllata). In the event that a
company is deemed to be experiencing significant but temporary financial or liquidity problems and there is
definitive evidence that its financial condition can be improved, the company may petition to the court to be
admitted to a controlled administration proceeding (amministrazione controllata), which can give troubled
companies up to two years to overcome temporary financial difficulties. Controlled administration proceedings
can only be initiated at the request of the debtor and subject prior approval by its shareholders. Moreover, the
amministrazione controllata plan proposed by the company must be approved by a majority of the company’s
unsecured creditors; secured creditors are excluded from the vote. This approval must be granted in a creditors’
meeting to be convened within 30 days of the initial court order. During the proceeding, actions by creditors
are stayed (subject to certain exceptions) and management can generally continue to operate the company
under the direction of the court. The court will also appoint a committee of three to five of the company’s key
creditors to monitor the conduct of the proceeding. These proceeding can be terminated at the request of the
court official, and, therefore, the company can be declared bankrupt if it appears that the proceeding is
ineffective or likely to be unproductive. A company can also apply to the court to terminate the administration
if it overcomes its financial difficulties or to ask for court-supervised pre-bankruptcy meetings with creditors,
should the conditions therefor be met.
• Extraordinary administration for large companies (amministrazione straordinaria delle grandi imprese in
crisi). Under Italian law large industrial and commercial enterprises may avail themselves of special
administration proceedings. The purpose of the administration proceedings is to rehabilitate a company in
financial distress in light of the significance of the company’s technical, commercial, productive and
employment value. The new proceedings enacted following the insolvency of the Parmalat Group are available
to insolvent companies having more than 1,000 employees and debt (including debt arising from outstanding
guarantees) of at least €1.0 billion. Thus, based on our current numbers of employees, we may be able to avail
ourselves of these proceedings. This recent legislation represents a refinement of the old proceedings as it
expedites the admission to extraordinary administration for the companies which satisfy the aforementioned
conditions. The substantial effects of the procedure, however, remain unchanged. These consists of: (i) the
adoption of a rehabilitation program which might alternatively be a program of corporate restructuring (lasting
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