The estimation of shareholder value in corporate restructuring plans has often been a contentious issue.
The corrective decree to the Crisis Code, expected to be finalized by September 13, seeks to address these concerns by providing a technical definition of this value.
However, some practical application questions remain unanswered.
When a company presents a restructuring plan, not all assets are allocated to creditors, as the company continues to operate, retaining value.
The Crisis Code mandates that the value benefiting shareholders must be estimated if creditors oppose the plan.
This value pertains to shareholders present at the time of the crisis resolution, excluding those who became shareholders through capital increases during the plan's execution.
The decree fills a gap by specifying that shareholder value is the present value of future cash flows from the restructuring plan, plus any terminal value, net of contributions.
The plan must include data to estimate this value, but it is unclear if the plan must explicitly state the value itself.
If deemed excessive, creditors can challenge it, and the court must ensure creditor satisfaction is not compromised.
The Verona Tribunal ruled that failure to indicate this value can lead to plan rejection if any class dissents.
Companies must carefully consider whether to address this in their proposal and possibly provide supporting appraisals.
The decree mandates using 'value in use' based on accounting principles, though these do not capture all economic capital determinants.
An asset-side valuation approach is preferred, focusing on the company's overall future income, using unlevered cash flows and the WACC for discounting.