Industry

Former Ilva, Adi Holding declared insolvent: debts of 1 billion

Acciaierie spa had already been declared insolvent on 29 February. The board: there is 'a state of current and irreversible insolvency. Impossibility for the company to meet its obligations with ordinary means'.

5 November 2024

4' min read

Acciaierie d'Italia holding also came to an end. As it had already happened months ago for the main company, Acciaierie d'Italia spa (the former Ilva), also for the holding company the Court of Milan recognised the state of insolvency, i.e. it found the debtor's inability to meet its obligations with ordinary means.

The private partner ArcelorMittal Italy Holding srl and the public partner Invitalia spa also took part in the proceedings brought by the commissioners of Acciaierie d'Italia under extraordinary administration. In these proceedings, the Court of Milan announced, "a financial imbalance of almost EUR 1 billion was ascertained - also with the help of advisory support - with a heterogeneous composition, mostly attributable to debts to shareholders, professionals and suppliers".

"The expert came to determine at EUR 913,318,805.00 the equity deficit that the company had at the date of the filing of the appeal," reads the ruling. While "ADIH's liabilities, quantified at a total of EUR 954,625,205," include debts for shareholder loans of EUR 750 million. In its judgement of 4 November, announced on 5 November, the panel therefore considers 'a state of current and irreversible insolvency exists, as it emerges from the many considerations made that it is impossible for the company to meet its obligations from the liabilities side with ordinary means and that a commitment of financial support from shareholders is unrealistic'. Finally, the same Court announced that 'the verification of the state of liabilities has been set before the delegated judge of the proceedings, Laura De Simone, for 5 March 2025'.

Creditors are now to be included in the statement of liabilities

As with the other companies of the AdI group, creditors will have to be included in the statement of liabilities, whose individual positions will be examined by commissioners Fiori, Quaranta and Tabarelli and the delegated judge.

It must be said that the holding company companies, AdI Energia srl, AdI Servizi Marittimi srl, Adi Tubiforma srl and AdI Socova sas had already been declared insolvent and admitted to extraordinary administration on 1 March by decree of the Minister of Enterprise, Adolfo Urso. For AdI spa, on the other hand, the extraordinary administration was triggered on 20 February, again by Urso's decree, while the state of insolvency arrived on 29 February with a ruling by the Court of Milan.
The holding company's insolvency is yet another chapter in a legal battle that has pitted ArcelorMittal, Acciaierie's previous majority shareholder, against the state since the beginning of the year and up to the present. In fact, ArcelorMittal tried to oppose both the extraordinary administration and the declaration of insolvency, proposing as an alternative recourse to the negotiated settlement of the crisis, a solution rejected by the Court of Milan as there were no margins. On that occasion, the court held that AdI had an 'irreversible impossibility of regularly meeting its obligations'.

There is 'the absolute absence of cash liquidity for the survival of direct business continuity', added the panel, a situation, which 'is in no way contested by the company and in any event was ascertained by the expert during the negotiated settlement and examined by the Court'.

Statement of AdI spa's liabilities, receivables of 1.5 bn admitted

Subsequently, on 19 June, there was a hearing in Milan for AdI spa's statement of liabilities, and here again Judge De Simone admitted a total of EUR 1.545 billion, excluding EUR 217.919 million.

The admissible portion is broken down as follows: EUR 4.473 million in privileged prededuction, EUR 352.148 million in unsecured prededuction, EUR 26.967 million in privileged prededuction and EUR 1.162 billion in unsecured prededuction.

This is with respect to the first hearing based on the timely applications of AdI's creditors. There will then be late and ultra-late applications to be considered as the procedure provides.

For the creditors, mostly companies in the supply chain, who were able to prove the essential nature of their activities in relation to Acciaierie's production and their possession of prededuction (payment in advance with respect to other categories of creditors), partial repayment has already taken place through the intervention of Sace, which has made available an ad hoc ceiling.

With a settlement with AdI, these creditors obtained 80 per cent of the sums accrued before AdI went into extraordinary administration. This was not the case for the extraordinary administration of Ilva in January 2015, where creditors are still waiting.

Decisions on companies intersect with the sale

Finally, the Court's decisions intersect with the sale procedure of Acciaierie, which is approaching a decisive junction. By the end of the month, the commissioners expect binding offers from potential investors. Both AdI spa and its subsidiaries are going to the market.

There are 15 groups in the running, including the Marcegaglia group, but the latter only with regard to certain assets, and of the 15, only 3 are aiming at the whole group. They are the Indians of Vulcan Steel (who have visited the plants with Naaven Jindal in recent days), the Azerbaijanis of Baku Steel Company (who should be arriving soon) and the Canadians of Stelco, now passed on to the Americans of Cleveland Cliff.