Recent Developments On Wind Jet's Financial Situation: The Judicial Composition With Creditors

Last August the low-cost airline Wind Jet suspended all its flights and ceased all operations, causing several problems for its passengers, and prompting Enac (Italian Civil Aviation Authority) to put in place the necessary reprotection mechanisms with the cooperation of Alitalia, and Meridiana the second largest Italian airline operating domestic, European and intercontinental flights. Livingston - the new Italian airline operating international and intercontinental flights mainly from its base at the airport of Milan Malpensa - also operated special flights for the re-accommodation for the passengers involved.

Wind Jet was founded in 2003 to operate flights from the major Italian cities and some foreign airports to Sicily. In less than a decade, from its hub in Sicily (Catania), the company became the fourth Italian airline by number of passengers.

The financial difficulties of the last years and the absence of adequate investments and/or marketing strategies brought the company to the decision to cease all flights, leaving several passengers, travel agencies, suppliers and employees, to face the risk of bankruptcy.

Only recently the airline decided to avail itself of the new debt restructuring rules introduced by the Italian Government with the Law Decree number 83 dated 22 June 2012 (the so called "decreto sviluppo"), which establishes important measures aimed at stimulating the Italian economy and also significant amendments to the Italian Bankruptcy Act, in order to better cope with the current financial crisis.

The Decree represents the very last step of a reform movement of the Italian bankruptcy system which began in 2004 with the aim of making the distressed Italian market more appealing for potential domestic and international investors. The new rules have indeed the purpose to facilitate the restructuring of distressed companies through quicker access to judicial composition with creditors, interim financing and a new special form of composition aimed at ensuring the continuity of the debtor's business.

The procedure is supervised by the Court and is somewhat similar to Chapter 11 in the U.S, it has been used in prominent restructurings such as Mariella Burani Fashion Group and Fondazione San Raffaele del Monte Tabor.

Wind jet has therefore filed an application for concordato preventivo (Composition with creditors) ex new formulation of article 161 para 6 of the Italian Bankruptcy Act, according to which the debtor is now...