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19 December 2012
On October 23 2012 the first application by an Italian airline was filed before the Civil Court of Rome for the concordato preventivo in continuità procedure - a special form of arrangement with creditors introduced by the recent Decree Law 83/2012 - which has similarities to US Chapter 11 bankruptcy proceedings.
The law provides that a company whose ordinary course of business is affected by crisis or insolvency, but that nonetheless maintains restructuring capabilities, may use this procedure to:
During the course of the insolvency procedure, the debtor must submit a restructuring plan that contains a precise forecast of costs and revenues throughout the prosecution of the activity and disclose the required financial resources and expected business strategy to restore efficiency.
The new insolvency procedure should allow the airline to face the challenges of the ongoing air transport crisis by strengthening its financial and capital structure. As a consequence of initiating the procedure, the Italian Civil Aviation Authority has granted the airline a temporary air carrier licence pursuant to Article 9 of EU Regulation 1008/2008.
The main effects arising from the application for the concordato preventivo in continuità procedure are as follows:
As mentioned, this procedure has similarities with the Chapter 11 model largely used by US airlines and constitutes a new, flexible procedure made available to Italian companies only recently. Such procedure could be an effective way to assist airlines in restructuring their business and regaining competitiveness in the market. It is meant to ensure continuity for companies that experience a crisis or distressed situation, but that can still commit to a recovery plan, by showing the financial resources needed and the business strategy to be implemented for the best interests of the stakeholders - mainly employees, customers, creditors and commercial partners.
For further information on this topic please contact Laura Pierallini at Studio Legale Pierallini e Associati by telephone (+39 06 88 41 713), fax (+39 06 88 40 249) or email (email@example.com).
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