With the recent rejection by the Company’s employees of the rescue agreement signed on last April 14th between the Ministry of Economic Development, the Company and the Trade Unions, the possibility of a recapitalization of the airline company has been definitely abandoned and the scenario of a compulsory administration has been opened.
From its side, the Italian government, after having excluded the hypothesis of a direct public intervention in the Alitalia's share capital, has opened to the possibility of financing a “bridge loan” that - with the approval of the European Commission - should ensure to the Company sufficient liquidity during the extraordinary administration phase.
Following the above request, the management of the Company must now wait for the Ministerial Decree to open the Extraordinary Procedure and to appoint, within the next five days, the Extraordinary Commissioners who will be in charge of managing this delicate transaction phase. From a technical point of view, the Extraordinary Administration procedure, ruled by Law Decree no. 347 of December 23, 2003 and Legislative Decree no. 270 of August 7, 1999, is a bankruptcy proceedings reserved to the large insolvent companies, which has the general aim to preserve the productive assets, through the continuation, reactivation or conversion of the business activities.
As a matter of fact, it is structured into two main phases: (i) a judicial phase, regulated in accordance with the rules of the Italian Bankruptcy Law, that deals with the recollection of the Company’s assets and satisfaction of creditors of the Company; (ii) an administrative phase, under ministerial direction, which aims to preserve the economic value and goodwill of the Company.
This last objective may be generally pursued by means of two alternative strategies:
- the alienation of the Company’s business, on the basis of a one-year ministerial program for the prosecution of the ongoing business (the so-called alienation program);
- the economic and financial restructuring of the Company, on the basis of a two-years ministerial program (restructuring program).
Since their appointment, the Commissioners will have 6 months (renewable for 3 more months) to submit to the government a company's restructuring program. If it is accepted, the procedure will proceed accordingly, if it is rejected the program can be converted into an alienation plan, or – worst-case scenario – in the winding-up of the Company.
Waiting for the upcoming administrative developments, a positive signal came from the Ministry of Transports Mr. Graziano Delrio, who some days ago announced that "anyone who is willing to bet on this company should be helped, whether Investment Funds or other airline Companies. The important thing is not to sell off but to preserve Alitalia's assets and value".
With reference to the alienation procedure, it is important to underline that it is a public sale procedure, ruled by the following main principle:
- the buyer must undertake to continue the business activities for at least two years from the transfer, by preserving the employment levels established in the transfer agreement for the same period;
- the choice of the buyer is determined also taking into account, in addition to the amount offered as sale price, the bidder's reliability and the related Economic and Financial Plan proposed by him;
- in the context of the Trade Union consultations between the extraordinary commissioners, the buyer’s and the employee’s representatives (mandatory pursuant to art. 47 Law 428/1990), it is possible to agree to the partial transfer of the Company’s employees to the buyer's dependencies;
- Unless otherwise provided in the transfer agreement, the buyer's liability is in principle excluded for debts relating to the Company’s activities prior to the transfer;
- after the transfer of the Company, the cancellation of the registrations relating to pre-emptive rights and the transcripts of the seizures on the transferred assets is ordered by a ministerial decree.
From a practical point of view, on the basis of recent positive experiences carried out by our legal team, the administrative phase aimed at the alienation of the entire business assets is generally regulated according to the following steps:
- a tender rules, drafted by the Commissioners and approved by the Ministry, is published on the main national newspapers and Company’s website;
- a preliminary phase for the recollection of the Expressions of Interest from interested subjects is opened;
- the access to the due diligence phase is granted, upon signature of a non-disclosure agreement by the bidders, to the interested subjects admitted to the Data Room upon a preliminary and rough evaluation of the Commissioners;
- The binding offers must be submitted within a final compulsory term fixed in the tender rules, along with the related guarantees for the execution of the ancillary obligations in case of adjudication;
- the binding offers are evaluated by the Commissioners according to requirements and criteria contained in the tender rules and law no. 270/1999, with priority given to the guarantees in term of maintaining standard occupational levels and business continuity;
- at the end of the evaluation process, the winning bidder is generally invited to start, along with the Commissioners, the trade-union consultations pursuant to Article 47 of Law 428/1990 and to enter into the relevant Trade Union Agreement;
- having verified the satisfaction of all the conditions precedent above and any other commitment required by the tender rules, the winning Bidder is invited to execute the Transfer Agreement before a Public Notary;
- the procedure will finally end with the Purchase Deed executed between the Companies and the Winning Bidder before the Public Notary.
A new future for the Italian airline has opened, and our Italian and international team is ready to provide assistance to anyone interested in this deal!
