BUSINESS CRISIS AND NEED FOR ADEQUATE ORGANIZATIONAL ARRANGEMENTS COMPATIBLE WITH THE “ITALY” SYSTEM …. THE NETWORK CONTRACT

Recently, in one of the many conferences proposed on the subject of L. Decree n. 14/2019, called “Code of business crisis and insolvency”, I was struck by some data relating to the Italian economy, which led me to reflect on some aspects, in my opinion, worthy of being shared.

First of all, the Italian economy is still today characterized by being populated, 95% by PMIs, mostly of whom micro-enterprises, family and / or craft (- like), with less than 10 employees.

These are companies that, even in times of major crisis, have shown an exceptional resilience and a truly commendable capacity to adapt, remaining alive and allowing even the companies at the top of the supply chain to survive the backbone of the Italian economy, obtaining quality products that characterize the “made in Italy”, with elasticity in production functions (perhaps) unparalleled abroad.

These PMIs provide for their financial needs, with the banking system, having mostly an extremely limited capital structure, with small equity, insufficient to cover, in particular , the costs of the digitalization of business activities, though it is essential for the development of productive activities, mostly coinciding with one’s own business activity.

Italian banks, on the other hand, are afflicted in percentage terms more heavily, than those of other European countries, by the NPF (Non-Performing Loan). And they are bordered by the application of the rules on UTC credits (Unlikely to pay), which, if applied in their rigid, current version, would put in great difficulty or serious risk (not say other) the relationship between the aforementioned PMI and the respective reference banks, no longer able to tolerate overruns and delays on the agenda.

On the other hand, and changing perspective, L. Decree n.14/2019 has intervened, with regulations already in force, on the necessary organizational structure of the company (Art. 375), establishing that the entrepreneur has the duty to set up an organizational structure “Adequate”, in order to timely detect the business crisis and the loss of business continuity and to implement “without delay”, the necessary measures. The Decree also clarifies that the management of the company, as to the aforementioned organizational choices for early warning tools “exclusively” with the directors (art. 377), and so does the consequent responsibilities (art. 378). Such responsibility way also lies with the control body (statutory auditors and/or audit company ), which (for companies required to have such bodies, pursuant to Art. 379) has the obligation to verify that the organizational structure, the financial and economic balance and the predictable trend of the management are “constantly” assessed by the directors, “immediately” reporting to the latter the existence of indications of crisis (art. 14).

The need for an integrated management system is thus envisaged, with the active careful and constant collaboration between management and control bodies, the adequacy of which, declined in terms of roles (ie people), procedures and tools, may create problems for the entrepreneurial system, made up of PMIs and micro-enterprises, unprepared for this cultural leap, even though the assessment must take into consideration the discretion that characterizes the business activity.

Both for the issues of a financial nature (for which the need to find alternative forms of financing, as opposed to traditional banking ones, will become increasingly pressing) and for the organizational ones, it seems to me that sharing the business risk will be necessary at the “supply chain” level. The last client that uses a multiplicity of suppliers and sub-suppliers, gradually smaller and smaller in size and unstructured shall disregard the cultural growth of his suppliers and / or sub-suppliers, for the preparation of adequate organizational arrangements and, in some case, assisting them also in the financial choices to be made to meet the needs in terms of investments and production capacities, based on shared business plans and budgets.

The network contract (referred to in L. Decree n. 5/2009, conv. In L33 / 2009, and subsequent additions and amendments), duly declined with clauses which, while not creating the risk of merging of the distinct, independent assets of the various companies involved, nevertheless can be valued in the relationship with third parties (for example banks) could be, already now, a valid aid and intervention tool, for the regulation of such supply chain relations, independently of the further measures that, perhaps, usefully our Government, aware of the Italian situation, could adopt.