Parmalat

This Discussion Paper describes developments affecting Parmalat of Italy, once one of the world's leading dairy-food firms, which filed for bankruptcy protection in December 2003. After the bankruptcy, it was discovered that fraud on a massive scale had occurred at Parmalat, putting the firm in the infamous category occupied by Enron, Tyco International, and WorldCom. This paper analyzes the origins, growth, strategies, downfall, and restructuring of Parmalat, and identifies implications for the U.S. and world dairy industries and international businesses that flow from the firm's experiences.Parmalat, Fraud, Bankruptcy, Distribution Channels, Brand Proliferation, Fragmented Industries, Debt Aquisition, Agricultural Finance, Demand and Price Analysis, Financial Economics, Industrial Organization, Marketing, Risk and Uncertainty,

Fading Investment Banking? Italy Before the Second World War

Investment banking; Fnancial innovation; institutions and regulation; Italy

After Argentina

Argentina recently completed the largest sovereign bond restructuring in history. As soon as the government announced the results of its $100 billion tender in March 2005, editorial pages worldwide heralded a new era for sovereign debt, for the emerging markets and, occasionally, for international finance. Their views on Argentina\u27s lessons were as disparate as they were definite. Some said the exchange would close the markets to middle-income countries. To others, it reaffirmed the markets\u27 resilience. Some claimed it proved the need for statutory sovereign bankruptcy. Others said it clearly discredited the idea. Most spoke too soon. The deal took months to settle, and by the time it did, it had confirmed many presumptions about emerging-market debt and shattered none. The real lessons of Argentina\u27s restructuring so far are more subtle and complex than the surrounding commentary. The default and the debt exchange were both points in a longer financial restructuring process that began before the default and will go on for years after the exchange. Argentina\u27s unorthodox debt management immediately before and after the default is partly responsible for the outcome of the exchange. With$25 billion in defaulted debt still outstanding, Argentina\u27s most important innovations may well be ahead

Italy and the first age of globalization, 1861-1940

The paper presents trade policy as in line with that of other continental European powers, with a move to moderate levels of tariff protection for politically sensitive sectors such as steel and textiles and clothing, but also in agriculture, with levels of protection falling slightly before the First World War. Monetary policy was similarly driven by the constraints of capital scarcity, and by the political priority attached to reducing the cost of funding government debt. The most innovative area was probably in industrial policy, where after the 1880s and again in the 1930s in response to sever shocks, quite creative institutional policies were adopted. In particular financial restructuring was used as an opportunity to reshape the structure of industry.Comparative Economic History, Industrial Policy, Monetary Policy, Monetary Regime,Trade Policy

Business groups and the boundaries of the firm

This paper aims to show that the business group – i.e. the set of firms under common ownership and control – is the most appropriate unit to study the behavior and organization of firms and define their boundaries. Particular emphasis is given to notions such as unitary direction – i.e. the influence over strategic decisions – and administrative co-ordination which allow owners to exercise supervision and authority over the controlled companies.business group; boundary of the firm; unitary direction

IL FINANZIAMENTO ALLE IMPRESE IN CRISI

The subject of the analysis relates the liabilities against the banks arising from the lending to companies in economic distress or default ("concessione abusiva di credito"). Traditional doctrines, from France and Belgium, affirmed that the bank should be considered liable for the damages caused to the creditors of the company. This claim is based on the principle of entrust and deceptive appearance: the creditor negotiates with the company, and trusts the company's solvency, because the bank funded (and keeps on founding) it. Italian courts (see also Cassazione Sezioni Unite 7029-7030-7031/2006) followed the above mentioned interpretation, but determined that the creditor's claim is personal: the bank cannot be sued by the official receiver ("curatore fallimentare"). As a consequence of the above, banks are actually immune from any claim: single creditors do not have the power and information needed to prove the liability. \u201cConcessione abusive del credito\u201d, under this interpretation, is a rigid and limited tort. Some Authors suggested that the banks, in case of negligent lending, can be considered as shadow directors - interfering in the company's decisions - and can be sued by the official receiver ("curatore fallimentare") for the damages caused to the company itself. This analysis explores another solution, resulting from recent studies in Germany (H. K 6TZ, Vertragsrecht, T\ufcbingen, 2009) and Italy (C. MIGLIO, L\u2019autonomia privata nel rapporto di finanziamento bancario, Giust. Civ. 2013, 9, p. 473). Briefly, under this different interpretation, the bank's loan granted to companies defaulted and/or in distress, should be considered void. This different solution considers the \u201cconcessione abusive di credito\u201d a threat to economic public order, generating negative externalities. Italian Constitution states that economic initiatives (\u201ciniziativa economica\u201d) cannot be contrary to public social utility (art. 41 co 2) \u2013 and bank law declares that the bank is obliged to a safe and prudent lending (art. 5 T.U.B.). As a consequence of the above mentioned second interpretation, the banks lose every guarantee, mortgage and surety securing the relevant loans; furthermore the banks can be sued by \u201ccuratore fallimentare\u201d for precontractual liability (art. 1338 c.c.): if someone does not disclose the voidness of a contract (that he knows or should know that it is void) the other part shall be compensated of the relevant damages suffered. The last step of the analysis regards loan agreements executed in the framework of a restructuring procedure. Italian bankruptcy law has developed in the last 10 years three different restructuring procedures: \u201cpiani di risanamento\u201d (art. 67 l.fall.), \u201cconcordato preventivo\u201d (art. 160 l.fall.) and \u201caccordi di ristrutturazione dei debiti\u201d (art. 182-bis l.fall.). According to the prevailing doctrine, in the context of a restructuring procedure, the bank cannot be considered liable of \u201cconcessione abousiva di credito\u201d: the relevant loan agreement is promoted and fostered by Italian law. But under an economic analysis of such law, a \u201cno liability\u201d rule is inefficient: the bank could avoid any credit rating and investigation on the condition of the company, allocating the default risk on the other creditors. We suggest that Italian law\u2019s \u201cfavor\u201d should be valued in considering bank\u2019s malice or negligence. Only when the lender knows (or should have known) that the turnaround plan was inconsistent, he should be asked for compensation by the creditors. In this perimeter, the contract should be usually considered enforceable: Italian law encourages lending during the turnaround procedures \u2013 the contract is not contrasting economic public order, but it can be the base of a compensation plea

Liberal economic nationalism, financial stability, and Commission leniency in Banking Union

This paper demonstrates that protection and promotion of insolvent banks remains a high priority for national authorities in Europe, and the Commission partially accommodates these impulses in the desire to preserve national financial stability. Insolvent banks are kept alive despite Banking Union rules on resolution designed to facilitate their closure at the cost of private investors. Italian and Portuguese cases demonstrate that pressure to relax state aid rules is strongest where problems are the greatest. However, the long-term trend is still an incremental decrease in national leeway to protect and promote national bank ownership