Italy

European countries still deal with insolvent firms far more harshly than America does, and most such firms end up in liquidation, a recent Economist analysis found. They often treat creditors badly too, meaning that neither side ends up satisfied. Observers worry that Europe will cope with the coming flood of defaults far less effectively than America, meaning a slower recovery. In recent years several European countries have tried to change their systems so that companies have a better chance of survival.

Italian airport officials say 14 flights at Rome's main airport have been canceled because Alitalia ground workers are in union meetings, the Associated Press reported. The officials say the flights, including eight destined for other countries, were scrapped Monday morning at the peak of the Christmas holiday season at Leonardo da Vinci airport. The workers are protesting hiring procedures by the new Alitalia, which is launching on Jan. 12 after a group of Italian investors officially took possession of the bankrupt company's profitable assets.

Several former top Alitalia officials have been placed under investigation as part of a probe into the national carrier's bankruptcy earlier this year, the ANSA news agency reported Wednesday. ANSA said Rome prosecutor Nello Rossi had placed eight former top officials, including presidents and CEOs active from about 2000-2007, under investigation. Alitalia, which has been losing some $3 million a day, filed for bankruptcy protection in August, plagued by labor unrest, competition from budget airlines and high fuel prices.

The Italian financial police say they have arrested fashion designer Gai Mattiolo on a charge of fraudulent bankruptcy, the Associated Press reported. Officer Stefano Catorci says Mattiolo was placed under house arrest in Rome early Friday for allegedly siphoning funds from his fashion house before declaring bankruptcy. Catorci says another suspect was also arrested on the same charges. He did not give further details because the investigation was continuing. The Rome-based fashion house Gai Mattiolo declined comment. Mattiolo was seen as a rising star of Italian fashion in the 1990s.

Troubled Italian airline Alitalia's debts have soared to some 2.3 billion euros, the company's special administrator said Sunday as a pilot and air crew strike caused a seventh day of cancelled flights, Agence France-Presse reported today. Augusto Fantozzi told RAI television he had "around two billion in ordinary debt for the supply of goods and services," before taking into account a 300-million-euro government loan. Alitalia's last publicly recorded debts going back to mid-2008 were 1.2 billion euros, although that figure did not include bills from suppliers.

The European Commission on Wednesday gave its green light to a plan by Italian investors to create a new Italian airline using the flight operations of the failed national carrier Alitalia, ANSA reported. Last August the Italian government changed Italy's bankruptcy laws to allow Alitalia's more profitable flight operations to be spun off into a separate company and sold while the carrier's remaining assets, referred to as a 'bad company', would be declared bankrupt and liquidated to pay for the airline's debts of over one billion euros.