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Italy: Securitisation law amended

Law Decree 145 of December 23 2013, converted into law with amendments by Law 9 of February 21 2014, (Decree 145) has introduced wide-ranging amendments to Law 130 of April 30 1999 (the Securitisation Law).

The five most relevant amendments are discussed below.

Securitisations through purchase of bonds

Securitisation transactions may be made, not only through the assignment for consideration of receivables, but also through the subscription or purchase of bonds and similar securities (other than for example, equity securities), by the company which issues notes for the purpose of financing such subscription or purchase (the special purpose vehicle or SPV).

Under the above securitisation transactions, the companies which issue the bonds so subscribed or purchased are treated as assigned debtors for the purpose of the Securitisation Law.

Segregated accounts

SPVs may open segregated current accounts with the depository bank into which the amounts paid by the assigned debtors, or due to the SPV under the transaction documents, are credited (the segregated accounts).

The amounts credited into segregated accounts (the segregated amounts) benefit from a special ring-fencing rule, which is designed to protect the rights of the holders of the notes issued by SPVs to finance the purchase of receivables under the Securitisation Law (the noteholders).

In particular, under the amendments introduced by Decree 145, the segregated amounts are separated, for all purposes, from the depository bank's assets and from the assets of other depositors.

The segregated amounts, in fact, may be subject only to claims brought by the noteholders, and may be applied exclusively to pay the noteholders and certain other counterparties to hedging transactions as well as the transaction's expenses.

Should the depository bank be subject to bankruptcy or other similar procedures, the segregated amounts are excluded from the depository bank's assets and are to be returned in full to the SPV.

The ring-fencing rule is also applicable, mutatis mutandis, to segregated accounts opened by the entities responsible for the collection of the assigned receivables into which the amounts collected by them on behalf of the SPV are credited.

Securitisations involving businesses' receivables

Under the new provisions of the Securitisation Law, introduced by Decree 145, the assignment of businesses' receivables (as defined in the law on factoring transactions) may also apply to third parties, at the discretion of the parties, starting from the certain date of payment of the relevant consideration (the entry of the cash on the assignor'saccount fulfils the requirement of a certain date of payment).

No set-off by the assigned debtors

Starting from the effective date of the assignment of the receivables, the assigned debtors are not allowed to set off any credits they may have towards the assignor and which arise after the effective date against the receivables purchased by SPVs under securitisation transactions.

Securitisations involving public receivables

The formalities required under the laws and regulations regarding the assignment of receivables towards public entities (according to which any such assignment must be made through a public deed or private writing authenticated by a notary or the public debtor's competent officer, and notice must be served to the relevant public debtor) are not applicable to securitisation transactions involving such receivables.

Susanna Beltramo and Bruno Zerbini

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