This means that some form of insolvency procedure has been officially registered due to a poor financial position. This may be due to liabilities exceeding assets and insufficient cash flow making it impossible to keep the business running. This usually happens when shareholders cannot inject any new capital into the company and the total equity (company capital and reserves) have been written off by operational losses. In these cases bankers will not support the company any longer with new credit lines leaving the company with insufficient financial resources to assure regular payments to third parties such as suppliers, employees etc. According to the Italian Corporate Law, in these cases directors are obliged to promptly file for an Insolvency Procedure with the local Public Court.
This follows information that CVS Ferrari has entered into a special terms agreement with creditors for the settlement of their payables, although it is known that even today, the company is unable to pay at least one creditor a promised and agreed amount.
It now looks very likely that the Italian manufacturer of reachstackers, forklifts, side loaders, and straddle carriers faces an uncertain future, not least because (as in the case of other medium-size Italian companies affected by credit crises), the banks are now applying excessive levels of caution regarding the granting of credit.
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