Securitisations and benefits for the “ReoCo”

Law Decree 30 April 2019 no. 34 brought important innovations to the rules set in Italy by Law130/1999 for securitisation.

Article 23 of the mentioned Law Decree, in addition to various fiscal reliefs, introduces certain provisions aimed at simplifying the management of NPLs also through “en masse” sales to special purpose vehicles authorised to fully or partially take over the original debt (real estate owned companies – “ReoCo”).

Law 96/2017 had already amended the law on securitisations, introducing a specific article allowing the setting up of ReoCos which are entitled to purchase, manage and enhance the value the immovable assets and registered moveable assets as well as other assets granted as security for securitised credits.

The aim of the ReoCo is to avoid that the sale of mortgaged assets thorugh insolvency or enforcement procedures, generates scarce or very low proceeds, and therefore ReoCos or the same securitisation vehicle (“SPV”) may purchase the assets in order to obtain their future enhancement of value, to the benefit of the securitisation vehicle. ReoCos and SPVs may for example take part in the mentioned procedures and request the assignation of the assets in case of lack of offers by third parties.

Following to the further amendments brought by Law Decree 34/2019, in case of assignment of credits qualifying as NPLs by banks and financial intermediaries, the transfer of the secured assets to the SPV or the ReoCo could be perfected also under the simplified rules of the “en masse” assignment pursuant to article 58 of Italian Consolidated Banking Act (even if they relate to single credit/assets and therefore in principle they do not fulfil the requirements for being eligible for “en mass” assignment).

In particular such rule provides that the assignment is notified to the relevant debtors through a registration in the Companies Register and publication in the official Italian journal (Gazzetta Ufficiale) to the effect that privileges and securities of any type created by any party in favour of the assignor will keep their ranking in favour of the assignee, with no need of additional formality or registration (and payment of relevant taxes/duties).

The amounts obtained by the SPV or the ReoCo by the management of such assets and rights can be used only for the repayment of the rights incorporated in the notes issued by the SPV and the costs of the transaction. They are also ring-fenced so that against them no actions could be started by creditors different from those of the securitisation vehicle.

Following the amendments of 2017, SPVs can also grant loans to facilitate recovery of the assigned credits and facilitate the restructuring of the debtor. Following to Law Decree 34/2019, loans can be granted also to third-parties which take over the liabilities of the debtors or to third-parties which are linked to the latters (controlled or affiliated companies).

Finally, Law Decree 34/2019 also introduced many fiscal reliefs , such as the application of fixed registration tax (currently limited to Euro 200), on all deeds and transactions related to the transfers of the assets to the ReoCo or the SPV. The subsequent transfer of the assets acquired by the ReoCos or SPV to parties involved in entrepreneurial activities, is also subject to the same registration tax of Euro 200, provided that the purchaser declares the intention to transfer them within the next 5 years. Shall that not be the case, the purchaser will be forced to pay registration tax under ordinary criteria, increased of sanctions and default interests.

If the assets are instead sold to parties not involved in entrepreneurial activity, registration tax will be still limited to a fix amount of Euro 200, provided that the purchaser is an individual eligible to certain benefits (applicable for the “first domicile” housing regime).