The bankruptcy Pegasus: stalking horse agreements in aviation

The Virgin sale shows the flexibility of Australia's restructuring regime and sets a significant judicial precedent for future control transactions.

Virgin Airlines restructured through voluntary administration

On 20 April 2020, Virgin Australia and a number of its subsidiaries were placed into voluntary administration owing $7 billion of debt to around 12,000 creditors with partners at Deloitte Australia being appointed as joint and several voluntary administrators of Virgin. Clayton Utz was appointed to act for the Administrators.

In November 2021, the High Court of Australia will consider the application of the Convention on International Interests in Mobile Equipment done at Cape Town on 16 November 2001 (the Convention) in Australia in light of facts arising out of the administration of the Virgin Australia group.

Etihad, die staatliche Fluggesellschaft der Vereinigten Arabischen Emirate, war Hauptaktionärin der Air Berlin. Etihad stellte Air Berlin seit 2011 Liquidität zur Verfügung. Als sie die finanzielle Unterstützung im August 2017 beendete, stellte Air Berlin wenige Tage später beim Amtsgericht Charlottenburg einen Antrag auf Eröffnung des Insolvenzverfahrens. Die rechtlichen Folgen dieser Insolvenz sind immer noch nicht ganz abgearbeitet. Ein wirtschaftlich bedeutender Aspekt beschäftigte zuletzt die deutschen und englischen Gerichte.

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On 15 June 2021, the Central Bankruptcy Court approved the rehabilitation plan for Thai Airways International PCL (“THAI”), marking a significant milestone for one of the largest insolvency proceedings in Thailand.  A number of factors underlined the unprecedented nature of the THAI restructuring. This was the first-time rehabilitation proceedings were sought by a national flag-carrying airline in which the Thai government controlled a substantial portion of the equity.

The recent restructuring of the Norwegian Group by the Irish High Court helpfully clarifies the application of the Cape Town Convention in Irish restructuring. It is also an interesting case study regarding the circumstances in which the Irish courts will restructure a group of companies, which is not headquartered in Ireland.

Earlier today, 26 May 2021, the final condition to the restructuring plan for the Norwegian Air Shuttle group was met, allowing the Examiner’s scheme to become effective: confirmation that the business has successfully raised 6bn NOK.

Swissport Belgium, one of the two licensed ground handling service providers at Brussels Airport, was declared bankrupt in June 2020, three months after the airport's operations were interrupted due to measures adopted by the Belgian government to limit the spread of COVID-19. Nearly 1,500 workers lost their jobs.

In order to support these workers, Belgium applied for assistance from the European Globalisation Adjustment Fund (EGF) to help these redundant workers back into employment (especially those with no professional qualifications or with a low level of education).

KEY POINTS The risk that prepetition lease payments made by a lessee that is a debtor in a US bankruptcy will be clawed back from an aircraft lessor can be reduced if: • the lease is a true lease rather than a disguised secured loan or finance lease • one or both of basic rent and maintenance reserves are payable in advance (i.e., at the beginning of a rent period rather than at the end) • basic rent and maintenance reserves are payable monthly rather than quarterly or semiannually • the lessor enforces the lease’s payment obligations consistently • any payment made by a third party on beha

Travel & Aviation Quarterly Issue 3 – Spring 2021 3 Hare Court Travel & Aviation Quarterly 2 www.3harecourt.com Issue 3 – Spring 2021 21 Table of Contents Foreword 4 Contributors to Issue 3 5 What will change in UK equality and employment law as a result of Brexit?