EACTP Autumn Newsletter

Autumn 2020 I www.eactp.eu

Introduction from this edition’s editor, Paola Tondelli

This edition comes in a very difficult moment for the world economy. All countries are getting organized to support enterprises relaunching their activity and business after the long period of lockdown. The IMF estimated that the global economy will shrink by 3% this year. It described the decline as the worst since the Great Depression of the 1930s. The impact of this recession on GDP will continue to be felt for years to come. According to a recent report by Fitch Ratings, GDP level in the largest advanced economies is expected to remain around 3% to 4% below their pre-virus trend until the middle of this decade. Huge uncertainties surround the economic outlook while the path that the coronavirus outbreak will take is unknown.

This is an extraordinary moment in the history of the world economy one in which it is necessary to reprogram the way enterprises function and how they do business. Some sectors will have to rethink completely their way to provide services, a lot of enterprise will not survive. Many people have already lost their jobs or seen their income cut due to the coronavirus crisis. Single countries and international bodies are putting in place a strong effort in order to support the economy and their citizens welfare, starting with the massive € 750bn recovery package agreed within the EU.

In this dramatic situation, there is an unprecedent opportunity for the turnaround profession. It will be very important to have managers with the right skills to understand first if a business has the possibility to survive and then how to restructure it.

On that respect we are pleased to announce an important step taken by EACTP. We have reached a cooperation agreement with Leiden University to act as faculty in the education of young and aspiring turnaround professionals, to host the syllabus materials known as the Body of Knowledge (BOK) on its on line platform, and to set and supervise examinations. EACTP President, Alan Tilley will go into the details of this agreement, of the examinations process and of how EACTP levels will be redefined in order to be more consistent with the US ones.

In this edition we are also giving some updates on how different countries are implementing important reforms of restructuring legislation not only to respond to Covid-19 issues but also to take the opportunity to better face the challenges of complicated restructuring.

More specifically, I will go through the major trends that characterize the Italian restructuring and turnaround market which has been also influenced by a comprehensive reform of the bankruptcy law that will take full effect in July 2021.

UK new legislation on company rescue will be explored by David Bryan who will give a view on what does it mean for businesses. You'll also find a graphic overview of French restructuring, then there will be articles on Romania by Catalin Nichifor and Holland by Jantine Hak.

In addition, we present an interesting comparison between US chapter 11 and European typical restructuring process in order to debate if the American process might be considered a superior and more efficient process or not.

Furthermore, Alan Tilley, having spent the early part of his career managing businesses before entering the turnaround field, presents his strong views about the need for true ‘hands-on’ operational turnarounds, as businesses face the Covid-19 crisis.

Finally, we strongly encourage all EACTP community to enroll and participate to the TMA Europe first online conference “Navigating a new era” that will he held on 17^th and 18^th September. Every year the event attracts international turnaround professionals with an very interesting programme and a lot of peer-to-peer networking opportunities. We expect guests from across the globe, tapping into the knowledge, connections and opportunities only available via TMA Europe.

Our events – this year online for the first time - attract practitioners, lenders, lawyers, consultants, auctioneers, liquidators, appraisers, investment bankers, equity investors, workout specialists and outsourcing professionals amongst others.

Thank you

Paola Tondelli

President TMA Italian chapter

Managing Director – illimity SGR

If you would like to be guest editor for our December newsletter, please email eactp@turnaround.org.

News from EACTP president, Alan Tilley

A milestone in EACTP development

This month EACTP reaches an important step in the progress of our Education and Certification programme. We have reached a cooperation agreement with Leiden University to act as faculty in the education of young and aspiring turnaround professionals, to host the syllabus materials known as the Body of Knowledge (BOK) on its online platform, and to set and supervise examinations. Success in these examinations will be mandatory for new members at EACTP entry level from January 2021. Turnaround and client experience will continue to be recognised, however, and case studies and professional references will measure subsequent progress to higher CTP levels.

Global recognition

Education and examination success is the bedrock of a credible professional organisation and has been the basis for the TMA Global ACTP programme for over 30 years. EACTP as the European counterpart of ACTP will now mirror that global qualification in breadth and depth of education, levels of experience, and be recognised as the global hallmark of turnaround excellence in both theory and practice.

A vision for the future

The CTP qualification is an important mark of professional capability and experience for members recognised across the spectrum of stakeholders in reorganisation and restructuring, at a time when turnaround and consensual restructuring ahead of insolvency and balance sheet restructuring is increasingly encouraged by European governments in the direction of their new legislation. The development of EACTP as an education and training organisation and its association with a leading European academic institution such as Leiden University will add to its status. It is our vision that governments across the region will recognise CTP certification as a qualification for supervisory and reporting roles in the restructuring process.

The education programme

Under the programme candidates will be tested in the three disciplines of turnaround:-

Stakeholder and Operational Management.

Accounting and Finance.

Legal Principles in six main European jurisdictions, EU Regulation and aspects of the US Bankruptcy Code.

The BOK’s will be available online from next month with first online examinations in early 2021. The costs and the application process will be available on the website in September.

The education process is aimed at young professionals to become Certified Turnaround Analysts (CTA’s), and with a further four years’ experience and the submission of cases and references they can progress to Certified Turnaround Professional (CTP) status.

During 2021 we plan with Leiden University to introduce training workshops, online and attendee subject to legislation on multiple participation meetings, and as supplementary to the self-study programme.

A window of opportunity for experienced non-members

There is a brief window of opportunity up to December 2020 for experienced non-members to attain membership by the current case submission and references method and approval by the Standards and Admission Committee. After that, all new applicants and reapplications for lapsed members, including those who have not paid 2019/2020 fees by December 31^st 2020, must achieve examination success for membership.

Qualification levels

Going forward EACTP categories will mirror the US levels;

Analyst (CTA); Current Analysts and new entrants based on examination success

Professional (CTP), Current Members and Fellows and new entrants based on examination success and four years’ experience with cases

Senior CTP (Veteran in the USA), CTP’s with 12 years’ demonstrated experience and current Companions

CTP Emeritus for retired professionals

CTP Honorary for recognised industry leaders with a high bar to entry and by Board invitation only.

During the transition period, current EACTP Members, Fellows and Companions can continue to use their existing status levels for personal promotional purposes. However, for internal administration and fee purposes, they will all be CTP’s as above.

Marketing

The programme will be promoted by a joint EACTP/Leiden University press release this month. It will be highlighted at the TMA Europe virtual conference on September 17^th where Professor Jan Adriaanse and myself will be interviewed by John Willcock, editor of Global Turnaround, on the objectives of the programme, and its particular relevance in the current business environment. It is a timely intervention, not only with post-COVID-19 business disruption and distress pointing to increased activity in the coming months but also with new legislation in The Netherlands with WHOA and in the UK with CIGA, and this latter aimed particularly at business rescue outside of insolvency for SME’s.

Contributions

Fees

EACTP is a self-funded organisation, and its financial independence is an important factor for CTP’s acting without conflict across the range of stakeholders’ interests. Due to delays in launching the Leiden programme, the Board decided to waive 2019 fees; for those who were billed in 2019 and have paid, their contribution will be allocated to 2020. Those who have been invoiced in 2019 and not paid, a credit note will be raised and a new invoice raised for 2020 to avoid a lapse in membership. Those who were not billed in 2019 will receive the 2020 billing in September for immediate payment.

TMA Europe conference

I hope you can join us for TMA Europe’s online conference September 17^th/18^th. Amongst the keynotes and panels there is a dedicated EACTP session hosted by myself and Jan Adriaanse where you can find out more about our future plans.

Of course, there is a discounted EACTP member rate of £118 + VAT for full conference access, including online networking. Or there is a content-only option for £99 + VAT. I encourage you to attend to catch-up with friends and colleagues. This year’s theme is ‘Disruption: Navigating A New Era’ and it is important to keep abreast of the market and continue our professional development.

The Conference is easier to attend than ever before and I look forward to seeing you online there.

With best regards

Alan Tilley

President EACTP

Recent trends in the Italian restructuring and turnaround market

By Paola Tondelli, managing director of illimity SGR

In a phase characterized by a severe contraction of economic activity, the Italian Government approved specific interventions to provide families and businesses with instruments to cope with the financial consequences of the Covid-19 emergency. The main measures have been introduced by three Government decrees.

To continue reading, please click here.

US Chapter 11s - Are they superior to European processes?

By John Willcock, Editor of Global Turnaround magazine

Does the current boom in US Chapter 11s compared to generally quiet bankruptcy markets in Europe demonstrate the superiority of the American process, or simply that the economies on either side of the Atlantic are at different stages?

I’m guessing you would have to spend many months or even years studying reams of financial evidence before deciding on this, but the reason I raise the question is the nature of the Covid-19 crisis. It’s intrinsically global. Unlike the global financial crisis of 2007-8, which hit the US and Europe hard but left much of Asia and Australia unscathed, the Covid-19 pandemic and subsequent lockdown has hit countries all over the world.

To continue reading, please click here.

New laws to promote company rescues - What do they mean for businesses?

By David Bryan of BM&T

The UK’s Corporate Insolvency and Governance Act (CIGA) became law on 26th June 2020 ushering in what one magic circle law firm described as “the most significant insolvency reforms for a generation”. The legal profession has written many excellent articles explaining the content of this 250 page Act. We want to look at what businesses need to understand about how this legislation will impact both those in financial difficulty and also those who find themselves customers or suppliers of such businesses.

First, let’s understand how we got here.

To continue reading, please click here.

A graphic overview of French restructuring

Many European professionals consider French restructuring procedures to be amongst the best in Europe. It is a combination of confidential out of court consensual and operational rescue processes and in court processes with operational reorganisation or sale and liquidation of non-viable businesses.

It is aimed at job preservation. However with the high costs of redundancies under the French social plan turnaround comes at a cost. Nevertheless it entails many of the features that EACTP members will appreciate as a workable restructuring regime.

EACTP September 2020

Transformations in the Romanian Economy

By Catalin Nichifor

On May 18th, 2020, Romania switched from lockdown to state of alert (situation still in place until end of September), forcing the government to provide on some measures to prevent and combat the effects of the Covid-19 pandemic for business and employees.

The Romanian economic landscape is going through a series of transformations, mainly determined by the impact of the Covid – 19 pandemic and the deep macroeconomic imbalances. Some of the changes are long time expected by the business community and some are derived (mainly indirect right now) out of EU Directive 2019/1023 - on preventive restructuring and insolvency, expected to be implemented in the local legislation until June 2021.

To continue reading, please click here.

New Dutch insolvency law, WHOA

By Jantine Hak of Kruger

The Dutch bankruptcy law is 125 years old, very solid, but in some parts outdated. For example, the 1893 Bankruptcy Act does not take into account matters such as an extra-insolvency settlement and / or the influence of European regulations and developments.

In order to reflect recent developments in this area, the 'Wet Homologatie Onderhands Akkoord' (WHOA) was submitted to the House of Representatives in the Netherlands on 5 July 2019. The proposal was adopted unanimously by the House of Representatives on 26 May 2020. The Senate is now considering this draft legislation and it is expected that this will be introduced in the Netherlands at the end of 2020.

This article provides a brief overview of the WHOA as it is expected to be implemented in the Dutch Law at the end of 2020.

To continue reading, please click here.

Now is the time for true operational turnarounds

By Alan Tilley of BM&T

Having spent the early part of his career managing businesses before entering the turnaround field, Alan Tilley has strong views about the need for true ‘hands-on’ operational turnarounds, as businesses face the Covid-19 crisis. CROs will be at the ‘sharp end’ of this drive, he writes, providing a vital alternative to insolvency.

To continue reading please click here.

Events

TMA Europe 2020 Annual European Conference, 17-18th September, online.

DISRUPTION: NAVIGATING A NEW ERA

Special pricing for EACTP members!

Click here to register | click here for the programme.

News for Members

Would you like to be the guest editor for the December issue?

If you would like to be guest editor for the December issue of the EACTP newsletter, please email Helen Lindop at eactp@turnaround.org.

Please remember to add your EACTP membership to your LinkedIn profile, and follow the EACTP LinkedIn Page. You are also welcome to join our LinkedIn group.

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