The following Restructuring & Insolvency guidance note Produced in partnership with Mark Craggs of Norton Rose Fulbright provides comprehensive and up to date legal information covering:
This Practice Note forms part of a set of Practice Notes on airline insolvency, for further information, see Practice Notes:
Guide to airline insolvency—introduction
Guide to airline insolvency—international considerations and implications for office-holders
Guide to airline insolvency—Monarch Airlines case study
The commencement of insolvency proceedings with respect to an airline can mean different things from the perspective of a financier, depending on the type of proceedings and how they have been instituted. The types of insolvency proceedings most commonly encountered in the context of airline insolvencies in the UK are administration, liquidation and receivership (although strictly the latter is a contractual remedy rather than a formal insolvency procedure). The adoption in 2015 by the UK of the Cape Town Convention represents a substantial concession in favour of secured creditors seeking repossession of ‘aircraft objects’ (broadly, qualifying airframes and aircraft engines) in cases where the Convention applies, the most important change being the disapplication in certain circumstances of the restrictions on enforcement which ordinarily apply in administration (as to which, see further below).
It is possible in certain circumstances (and depending on the jurisdictions involved) to use certain proceedings in a strategic and pre-planned manner so as to preserve the value of the airline’s business. However, in circumstances in which insolvency proceedings are instigated unexpectedly or
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