Laura Pierallini November 30 2022 Court decides that insolvent Italian airline's partial transfer of employees is legitimate Pierallini Studio Legale | Aviation - Italy Laura Pierallini Aviation FactsDecisionCommentFactsAlitalia, the former Italian flagship airline, was founded in 1946 and served more than 80 countries in Europe, Africa, Asia, North and South America, and Australia. Alitalia survived for 75 years, a period that spanned several economic crises, trade union struggles, capitalisation and privatisation.In 2008, the airline filed its first insolvency procedure via extraordinary administration, the Italian insolvency procedure for large insolvent companies. The project – which aimed at Alitalia's restructuring and which was financed by the second largest Italian bank, a group of Italian entrepreneurs and Air France as an industrial partner – failed.In 2014, UAE air carrier Etihad invested in Alitalia. However, this attempt to rescue the company also failed. In May 2017, Alitalia applied for its second (and final) insolvency procedure (via extraordinary administration as well).The restructuring process following Alitalia's insolvency was performed through three different sales of business. On 10 September 2021, the European Commission authorised the state aid necessary to continue flight activities, subject to the division of the former Alitalia company into three different business units, to be sold severally – namely, the aviation, handling and maintenance businesses.On 14 October 2021, the entire aviation business was sold to the newly set up ITA Airways SpA (a 100% Italian state airline). In July 2022 and October 2022, the handling and maintenance businesses were sold to Swissport and Atitech, respectively. Following the sales of business from Alitalia, various claims were raised by the employees who were not transferred along with the relevant business unit, giving rise to interesting court cases based on the individual situations.DecisionOn 7 November 2022, the Fourth Labour Section of the Court of Rome rejected an urgent claim brought by an employee of Alitalia under article 700 of the Italian Civil Procedure Code.The decision completes the judicial framework regarding the Italian Transfer of Undertakings (Protection of Employment) (TUPE) rule (article 2112 of the Italian Civil Code) for companies subject to insolvency proceedings. It confirms that the TUPE may be derogated as provided by article 63 of Law No. 270/1999, governing the insolvency of large companies (known as the "Law Prodi-bis"), following the process set out by article 47. Article 47 provides that, within the framework of the consultations on the transfer of business provided thereunder, extraordinary commissioners, purchasers and trade unions may agree on the transfer of only part of the employees, identifying those who will be transferred along with the business.The Court clearly pointed out that different regimes are applicable to companies that are facing a state of crisis and those under insolvency procedures. Consequently, the Court declared that a previous decision of the Supreme Court(1) was not applicable to this case.Indeed, in this case, Alitalia's insolvency status was undisputed and well documented, along with its status as a large company and the fact that the programme presented by the extraordinary commissioners aimed at the liquidation of the company's assets and activities, including the sale of business under discussion. Consequently, the partial transfer of employees agreed during compulsory negotiations with the trade unions complied with the special regime applicable to large insolvent companies. The claim was dismissed.CommentThe principles highlighted by the court may apply to other sales of business from insolvent companies in the aviation sector. Several Italian airlines have faced insolvency processes (eg, Blue Panorama and Ernest Airlines) or closed their business (eg, Air Italy) as a consequence of the crisis.For further information on this topic please contact Laura Pierallini at Studio Legale Pierallini e Associati by telephone (+39 06 88 41 713) or email ([email protected]). The Studio Legale Pierallini e Associati website can be accessed at www.studiopierallini.it.Endnotes(1) Judgment No. 10415 of 1 June 2020 – based on the TUPE as amended following the EU Court of Justice decision against the state of Italy's failure to implement Directive No. 2001/23/CE.