User:Matthew hk/sandbox/Bankruptcy of Parma F.C. S.p.A.

Parma Football Club S.p.A. is a football club based in Parma, Italy, entered financial difficulties during the mid-2010s. The club, incorporated as a Società per Azioni (company limited by shares), as well as its Brescia-based parent company Eventi Sportivi S.p.A., were declared bankrupted in 2015, 11 years after its predecessor, Parma Associazone Calcio S.p.A., entered administration. A scandal was later exposed that the club already entered financial difficulties before 2014–15 season, which the prosecutor of Italian Football Federation (FIGC) accusing the club making false capital gains in previous seasons by swapping youth players with fellow Italian clubs without involving cash. The aggressive nominal price tag of the players had made the club received a huge accounting capital gains. However, as all the transfer revenue were immediately converted into the accounting value of new signing, making the club had to amortize their value as intangible assets in the future seasons. According the liquidator, the club had at least already failed in mid-2013. However, a research that submitted to the Court of Bologna disagreed, as the net loss of Parma were personal guaranteed by the shareholders of Eventi Sportivi until November 2014. According to Calcio e Finanza, Parma gained a massive €195.48 million from player trading from 2009–10 to 2013–14 season. The editor coined the gains were "virtual", as the gains did not generate real cash flow.

In February 2016, the administrator of Parma requested to seized the assets of the directors of Parma, in order to cover the actual capital shortfall of €60 million of Parma.

In September 2016, the prosecutor of FIGC sued directors of Parma F.C. and a few Italian clubs that were involved in false accounting by player swap. However, Gianluca Sottovia (Padova's CEO), Marcello Cestaro (Padova's chairman), Diego Penocchio (Padova's chairman), Igor Campedelli (Cesena's chairman), Roberto Benigni (Ascoli's director), Silvia Benigni (Ascoli's director), Massimo Mezzaroma (Siena's chairman), Dario Cassingena (Vicenza's CEO), Tiziano Cunico (Vicenza's chairman), Pietro Leonardi (Parma's CEO), Luca Mancini (Cesena's chairman) as well as Vicenza Calcio and Brescia Calcio were inadmissible from the charge, as the time allowed for legal proceeding had expired. The prosecutor had appealed and accepted. Moreover, Ascoli, Padova and Siena were already bankrupted, thus the companies not included in the charge; Internazionale was involved in the players swap with Parma (in cash plus player deal), but not charged. However, the club and its directors were fined for another swap deal with Cesena in July 2016, for a deal involving Yuto Nagatomo, Luca Garritano and Luca Caldirola.

In a separate charge, former Parma chairman Tommaso Ghirardi and CEO Pietro Leonardi were banned from football for 5 years, as well as fines.

Timeline
Parma F.C. S.p.A. was incorporated on 25 June 2004, as a subsidiary of Parma A.C. in administration. Parma A.C. itself was a subsidiary of Parmalat. However, due to the bankruptcy of Parmalat, the football club also faced financial trouble, as the club was heavily rely on the financial support from the parent company. A separate false accounting scandal was exposed in 2007, which Parma A.C. was accused of making false profit by swapping youth players with A.C. Milan by inflating their value in accounting.

The birth of Parma F.C. as a special purpose vehicle to receive the good assets of Parma A.C. in 2004, was aimed to wipe-off the liabilities of Parma A.C. (the club had a negative shareholders' equity of €129.6 million at 30 June 2003), which in turn as a held-for-sale asset for the administrator of Parmalat. In 2007 Brescia-based businessman Tommaso Ghirardi, son of Enrico and Susanna Ghirardi, bought Parma F.C. from the administrator of Parmalat, via a company called Eventi Sportivi S.p.A., without any recapitalization of the club itself in the first few seasons. Banca Monte Parma, Brixia Incipit, Energy Ti Group were the minority shareholders of Eventi Sportivi; Ghirardi also bought back 40% shares of Eventi Sportivi from Angelo Medeghini in 2008.

The club was loss-making from 2006–07 season to 2009–10 season. The club also spent a season in Serie B in 2008–09, further deteriorated the financial health of the club, according to Leonardi himself. During 2010–11 season, the club had recapitalized €15.5 million, as well as a profit of €658,122. However, it also due to the increase in player trading profit that was accused by the FIGC prosecutor that some of them were false. At the same time, amortization expense started to increase dramatically as a side-effect of player swapping. From 2011–12 season to the eve of bankruptcy, the club was in loss-making again, which the shareholders' equity was decreased to €9.6 million, comparing to players assets "worth" €85.8 million, and a total debt of €197.4 million on 30 June 2014. The profit from "selling" players in 2013–14 season was €47.5 million, but in the same financial season the club had also spent €27.4 million in amortization.

In another deal, Parma F.C. also incorporated their brand as "Parma F.C. Brand S.r.l." and sold the subsidiary to parent company Eventi Sportivi in 2013, as a connected-parties deal, in order to "improve" the financial result of 2012–13 financial year. In consolidated financial statement, Eventi Sportivi (Parma F.C. Group) was already had a negative shareholders' equity on 30 June 2013 for €15 million, which was worsen to negative €21.1 million on 30 June 2014.

Despite Parma F.C. mathematically qualified to 2014–15 UEFA Europa League, which would increase both revenue and cost of the club, Parma was denied a UEFA club license to play in the European competition by the FIGC. According to Leonardi, the qualification would able to bring extra €12 million [revenue] to the club. During 2014–15 season, Ghirardi sold the club by selling the shares of parent company Eventi Sportivi.

In the eve of bankruptcy, Parma had signed more than 250 players, which some of them were free agent and spent time on loan from Parma, such as former Lithuanian internationals Tomas Danilevičius, who spent his 2013–14 season in Slovenian club ND Gorica.

On 19 March 2015, the club was declared bankrupt by the Court of Parma, with a total liabilities of €218.4 million (including unpaid wages of €63.0 million) at 17 February 2015. The same court document also shown the club had a negative shareholders' equity of €46.7 million on that day. Some valuable assets of the club, left the club after that day, such as former French under-21 internationals Jonathan Biabiany and Algerian internationals Ishak Belfodil by terminating the contract in a mutual consent. However, it also decreased the debt of the club as the players waived the club to pay the wages that already due.

After several failed auctions of the sports title and the good assets of the club in a lump sum by the administrator, which the new buyer just needed to honor the contract as well as bear an already reduced debt of €22.6 million, the company was officially shut down in June 2015.

At the start of 2015–16 season, the sports title of Parma was granted by the FIGC to a totally new company Parma Calcio 1913 for free (with a sufficient capitalization of the company itself), which the new club also bought the trophies of old Parma from the liquidator. The club was admitted to 2015–16 Serie D, thanks to comma 10 of the Article 52 of N.O.I.F..

Since 2015 former chairman Ghirardi, CEO Leonardi and other directors were charged for several misconducts in the management of Parma. Ghirardi and Leonardi were suspended by FIGC for a short period in 2015, followed by a 5-year ban from football activities in 2016. They were accused false accounting by backdate the selling of Marco Parolo and Aleandro Rosi to 2013–14 financial year in order to improve the financial result, as well as failed to record the payable generated by the signing of Camillo Ciano to the half-year report of 2014–15 financial year.

In September 2016, the prosecutor of FIGC also sued clubs that involved in the pure players swap with Parma.

In October 2016, Centro Sportivo di Collecchio, the training centre of Parma that was owned by the parent company Eventi Sportivi, was auctioned by the liquidator again.

Commentary
Il Sole 24 Ore reported that FIGC had introduced a new financial stress test for Italian football clubs, after the bankruptcy of Parma. However, the newspaper commented that it was not stringent enough.