The amendments to the italian securitization law introduced by the 2021 Budget Law

Prepared by Cristian Sgaramella and Giovanni Bombaglio

On January 01, 2021 (Official Gazette of December 30, 2020), Law no. 178/2020 became effective, containing the ” Italian State Budget for the financial year 2021 and multi-year budget for the three-year period 2021-2023″ (the so-called “Budget Law 2021”).

The provision under review has made certain amendments to Law no. 130 of April 30, 1999 regarding the securitization (the “Law 130”).

In detail:

  • the range of art. 1, paragraph 1, letter b) of Law 130 has been updated, in order to allow the application of the relative regulations also to transactions that envisage the supply of financing;
  • an authentic interpretation of art. 7.1, paragraph 4 of Law 130 is given.
Requirements for application of the framework established by Law 130/1999

The current wording of Article 1, paragraph 1, letter b) of Law 130, as amended by the Budget Law 2021, states that the sums received by the assignee as a result of the payment of the assigned receivables may be allocated  not only to the noteholders (as it was in the previous wording), but also to those who, authorized to grant loans pursuant to Article 106 TUB, have financed the assignee.

Thanks to the aforementioned amendment it’s now possible to extend the prerogatives recognized by Law 130 to the noteholders also to the lenders of the SPV who becomes the sole receivers of the sums generated by the assigned receivables.

Furthermore, the lawmaker establishes that, whenever the securitization transaction involves the disbursement of a loan for the purchase of receivables from the seller, any reference made to ” note ” and ” noteholder ” must be extended respectively to the loan and to the lender.

Finally, there is another amendment regarding the kind of funds subject to the destination constraint: in fact, if in the former wording reference was only made to the funds paid by the assigned debtor or debtors, in the current wording the provisions (and the consequent prerogatives) of Law 130 are also extended to the funds “however received to satisfy the assigned receivables“.

Authentic interpretation of Art. 7.1. co 4 of Law 130/1999

In addition, the aforementioned legislative act clarified the most appropriate interpretation of Article 7.1, paragraph 4, first sentence.

The article just quoted, introduced in 2017, disciplines the so-called ReoCo, i.e. a company with share capital, generally wholly owned by the SPV, having as its exclusive business purpose the acquisition, management and enhancement – in the interest of the securitization transaction – of real estate, registered movable property as well as other assets and rights connected with or constituted, in any form, as a guarantee for the receivables subject to securitization, including assets subject to leasing contracts (LeaseCo).

Consequently, we are talking about a vehicle used by the assignee who issues the notes to directly acquire at auction (or support the sale price by means of offers) the real estate assets subject to enforcement procedures, or to acquire the goods backed (movable property, real estate, rights) in order to enhance their value and sell them, assuming the risk of asset management on its own.

Budget Law 2021, explaining the interpretation of Article 7.1, paragraph 4, establishing that the ReoCo discipline must be intended so that the acquisition, by the special purpose vehicles, of the assets used as guarantee for the receivables securitized, including the assets subject to finance lease agreements (even if terminated), may take place, in addition to the usual forms, also as a result of demerger transactions or other aggregation transactions.

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For a deeper discussion, please contact:

Cristian Sgaramella

PwC TLS Avvocati e Commercialisti