The High Court recently in an ex tempore (unwritten) judgment (to be followed by a more detailed written judgment) approved a scheme of arrangement under Part 9 of the Companies Act 2014 in what may be a template for future restructurings in the aviation sector and a further example, following on from the Weatherford and Ballantyne cases, of the Irish courts' willingness to facilitate large international restructurings.
The case concerned the Nordic Aviation group, the largest regional aircraft lessor and the fifth largest aircraft lessor globally.
A scheme of arrangement under Part 9 of the Companies Act 2014 is very similar to a scheme of arrangement under the law of England and Wales. It is a flexible restructuring tool, requiring the approval of at least 75% in value and a majority in number of affected classes of creditors and court sanction to be binding. A significant distinction between such scheme of arrangement and its counterpart in England and Wales is that the court may on application grant a moratorium with regard to creditor actions to facilitate approval of the scheme. This is a feature of examinership also, the more widely used restructuring process in Ireland, which also, perhaps confusingly, entails use of a scheme of arrangement.
Although ultimately unopposed, the judgment of the High Court clarified a number of matters, including the following.
It re-affirmed, following Ballantyne, the ability to affect
third party liabilities. It went one step further than the court in
Ballantyne in that the company which proposed the scheme was the
guarantor of the relevant liabilities and the third parties were
the principal creditors.
Following case-law in England and Wales, it confirmed that the order approving the scheme was a judgment enforceable under the Brussels Regulation.
It held that, because of the overwhelming creditor support the scheme received, it did not constitute a non-consensual restriction on an enforcement remedy for the purposes of Article XI of Alternative A of the Aircraft Protocol to the Capetown Convention.
It is proposed that recognition of the order under chapter 15 of the US Bankruptcy Code will be sought.
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