Key Point
An "establishment" requires business and business activity to be carried out involving dealings with third parties and not simply acts of internal administration.
Facts
The UK is to ratify the Cape Town Convention and its Aircraft Protocol (together, Cape Town). This may help UK aircraft operators access cheaper capital markets funding. But that cheaper funding may require the UK, in effect, to adopt Cape Town's "Alternative A" insolvency regime. Section 1110, US Bankruptcy Code (on which Alternative A is based) has worked well in US airline restructurings. But Alternative A may not mesh well with English insolvency law. Will Alternative A hamper restructurings of UK operators of helicopters and other aircraft?
"The Government has carefully considered the views of the respondents to the call for evidence and has decided to proceed with ratification of the treaty" – para. 1.4 - Convention on International Interests in Mobile Equipment (the Convention) and the Protocol thereto on Matters Specific to Aircraft Equipment (the Protocol), Government Response to the Call for Evidence (the Government Response).
Introduction
Monarch Airlines Limited's administrators have won an appeal with the Court of Appeal(1) regarding Monarch's rights in and to certain 'slots' at Luton and Gatwick Airports after Monarch went into administration at the beginning of October 2017.
The case is significant, as it reaffirms the value ascribed to slots by airlines and their financiers as rights of the airline and the fact that, as a result, they can be traded for value even after insolvency.
Speed read
The British government has commenced an airline insolvency review, in the wake of recent high profile airline failures such as Monarch and Air Berlin, and on the premise that changes in the industry have outpaced protection regimes.
The review will focus on two main areas: repatriation of stranded passengers and redress for consumers. There is a desire to minimise repatriation costs falling on the public purse and ensure that consumers have clear avenues of redress.
In the recent case of R (Monarch Airlines Limited (in administration)) v Airport Coordination Limited [2017] EWCA Civ 1892, the Court of Appeal considered whether an airline that had fallen into administration could still be allocated valuable slots at airports.
An out-of-hours office appointment of an administrator, although not unusual, is not a regular occurrence in the world of insolvency. It is however, exactly what happened at 4am on Monday 2 October, as Britain’s longest surviving airline brand ‘Monarch’ entered administration. The collapse of the airline comes as a result of mounting cost pressures in an increasingly competitive market and is the third European airline insolvency in 2017, following Air Berlin and Alitalia.
Shortly after the last ever Monarch Airlines flight landed at Manchester Airport in the early hours of Monday morning, the airline entered administration, prompting the Civil Aviation Authority (CAA) to launch its "biggest ever peacetime repatriation" to bring home the 110,000 Monarch customers stranded abroad.
The impact on those travellers should be minimal, but an estimated 750,000 customers' future flights and holidays have been cancelled. Where they stand primarily comes down to whether their booking is protected by the UK's Air Travel Organisers' Licence (ATOL) scheme.
Introduction
In November, Jeoffrey Burtch, the Chapter 7 Trustee in the AE Liquidation bankruptcy (formerly "Eclipse Aviation"), began filing preference actions against various creditors of Eclipse. Eclipse Aviation began as a New Mexico manufacturer of small jet aircraft. The company filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on November 25, 2008.