En el caso de delito continuado, la pena podrá aumentarse hasta por una mitad más de la que resulte aplicable

Although in-court procedures of restructuring or liquidation seem to be the natural room for sorting out situations of financial distress while ensuring efficiency and equality of the procedure, directors and management have the alternative to proceed with a private restructuring. Under a private restructuring, also called workout on an informal basis, the court is not involved, so the directors' power is not officially supervised by an external authority and limited by special legal constraints.

In order to choose the proper way of restructuring, directors and shareholders of a distressed firm should make a careful comparison of benefits and costs of both methods and then

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implement the alternative which is expected to bring a favourable agreement with stakeholder while minimizing the direct and indirect costs of distress.

The main feature of a private restructuring is that the overall process of reorganization, from the disclosure of distress to the approval of the agreement, is guided by the intentions of directors and the contractual power of the counterparties; by consequence the distressed firm's directors have the faculty to choose the most relevant stakeholders to be involved into the restructuring and conduct the negotiations with good level of confidentiality. Although the managing power is not constrained by insolvency law provisions, creditors may ask the appointment of external consultants and auditors as precondition to initiate and conduct the reorganization. Negotiations among stakeholders are centred both on “how the company should be valued, how much debt there should be, how the equity should be split” (Moyer et al. 2012, page 68) and on the extraordinary measures to restart the creation of new value, declined both on new sources of revenues and on reduction of outstanding costs.

This type of restructuring is fully regulated by private agreements between the distressed firm and their creditors, which, in case of reciprocal consent, realize the refinancing of claims through modification of the original terms of the debt obligations. It follows that none of typical effects of the in-court restructuring procedure is automatic and they must be separately negotiated with the creditors.

First, the automatic stay is not granted, therefore the firm is exposed to the risk that the creditors involved into the negotiations of the restructuring, after having assumed the information about the severity of the crisis, adopt an opportunistic behaviour by undertaking those enforcement actions that, as already seen, threaten the business continuity, the equal treatment of creditors and increase the incidence of procedural costs. Furthermore, liabilities toward claimholders excluded from negotiations must be fully paid according to original contractual expirations, and the same rule applies towards creditors who abandon the negotiation or does not agree with the final term sheet. To limit the adverse effect of the opportunism during the negotiations, since they may jeopardize the success of the reorganization and the continuity of the business, the distressed firm, when it acknowledges the situation of crisis, should ask creditors to provide a moratorium agreement to ensure a fair and ordered conduct of the negotiations. The moratorium temporarily stops the faculty to undertake enforcement actions on defaulted debt and on accumulated interests; then, in the case the private restructuring is successful, the frozen debt will be settled according to the final term sheet, which will be written and approved by the parties in compliance with the applicable law.

Secondly, under private settlements of corporate crisis, in the case the distressed firm needs bridge financing, the situation is quite difficult to be sorted out. In fact, the firm can access to

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new debt financing only without altering the position the existing creditors: therefore, either the bridge loan is negotiated to be more junior with respect to existing debt, or the senior creditors voluntary renounce to their priority rights. However, the former operation is costly for the distressed firm in terms of new financial expenses and it leads to high exposition to default risk by the lender, while the consent on the voluntary subordination of outstanding debt is likely to be rejected by the senior creditor.

Then, with respect to parties who dissent on the negotiated outcome of the private restructuring, from a juridical point of view, the content the final term sheet is not applicable to them, so they retain the right to demand the payment of the outstanding obligations according to the original agreement. It is important to underline that the possibility of full repayment of the obligation excluded from the impairment is allowed by the reduction of the debt burden due to the approval of the restructuring agreement, since under the adverse hypothesis that the restructuring was not undertaken, the firm would be forced to declare the bankruptcy. (Cian, 2014)

Also, as it will be seen later, a framework constituted by private restructuring arrangements without automatic binding effect for rejecting counterparties opens the room for the holdout problem, which may affect the success of the overall procedure in a relevant way.

Moving toward the technical aspects, the private restructuring requires the presence of qualified legal, accounting and business assistance: usually the intervention of a consultancy firm specialized in resolution of corporate crises coordinates the negotiation with stakeholders and it puts in place the necessary action for the achievement of consent and the formalization of the restructuring plan. Private restructurings are perceived to be less costly than judicial reorganizations, because the latter are strictly regulated by formal constraints, such as the need of opinions from independent professionals and the continual oversight by expert appointed by the court on the day-by-day management. These formalities affect the amount of direct cost of restructuring: according to Gilson et al. (1990), “when debt is restructured privately, legal costs are reduced because [extraordinary business] decisions can be made more quickly” (page 319);

furthermore, the compensation scheme of bankruptcy practitioners gives them the incentive to prolong the time length of the procedure.

By contrary, a relevant positive aspect of private restructuring procedures is the confidentiality of the process: the negotiation and the implementation of the restructuring may remain covered by secrecy, being acts of internal management. Through workouts, only the stakeholders directly impacted by the turnaround plan are precisely informed about the actual situation of the firm: this strategy is reasonable if the crisis is not severe and it is likely to be completely sorted out by the negotiated reorganization measures. In the case of maximum secrecy, some relevant stakeholders, not directly involved into the restructuring, completely ignore the

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existence of a corporate crisis, thus preserving the relationship of trust and the corporate image.

Confidentiality ensured by workouts avoid the diffusion of wrong information among stakeholders that would cause panic and sudden alterations of the normal core business activity, thus augmenting the severity of the crisis, or they would increase the complexity of the private settlement of crisis because of the need of including more counterparties.

Recently, the innovation of the pre-packaged bankruptcy in the United States has changed the dichotomy in the choice between private and judicial restructuring. The institution matches the positive aspects of both procedure, while limiting the cost and the time required for the resolution of the crisis. It consists in a restructuring plan privately negotiated between the distressed firm and its stakeholders, with a formal solicitation for their votes. Then the firm files for Chapter 11 submitting the bankruptcy court the restructuring plan already approved by the creditors. In this way, the distressed firm “reduces the amount of time [spent] in bankruptcy court, lowering direct and indirect financial distress costs” (Gilson 2012, page 30). In this way, the application of the Chapter 11 majorities for the approval of the reorganization prevents the undesired consequences of holdout problem in the phase of negotiation, thus facilitating the approval of a fair and equitable restructuring measures.