Creditors owed money by CargoLogicAir (P3, London Stansted) can expect to be paid in full, but payment may take some time, say the airline's administrators. Per a FlightGlobal report, administrators Buchler Phillips Limited are negotiating their way around the international sanctions regime to access the funds.
CargoLogicAir went into administration in November 2022 after failing to find a UK bank willing to do business with it. The cargo carrier is ultimately owned by Volga-Dnepr Airlines (VI, Ulyanovsk Vostochny) founder and (until recently) CEO Alexei Isaikin. In June 2022, Isaikin was added to the list of high-profile Russians subject to UK sanctions, which included an asset freeze and travel ban that still remains in force.
"(Isaikin is) a director (or equivalent) of a company carrying on business in a sector of strategic significance (the transport sector) to the government of Russia, and therefore is or has been involved in obtaining a benefit or supporting the government of Russia," says the UK's Office of Financial Sanctions Implementation (OFSI).
In the wake of Russia's invasion of Ukraine and the subsequent round of sanctions against Russia, CargoLogicAir tried to distance itself from Isaikin by applying to the OFSI to have its ownership transferred to a UK-based trust structure under local employee control, an application the OFSI refused.
Isaikin acquired Cypriot citizenship despite being born in the Kirghiz Soviet Socialist Republic - now Kyrgyzstan - in 1952. Until he made the sanctions list, he was CargoLogicAir's top shareholder and a board director. However, he has since resigned from the board. Isaikin also left Volga-Dnepr in August after a management buyout. However, the sanctions regime prevented CargoLogicAir from operating its B747-400ERF and B747-400FSCD to airports in the European Union and the United States. While the OFSI did allow a minimal continuance of operations, the airline's UK banks made accessing accounts increasingly difficult, culminating in the carrier being unable to conduct day-to-day banking activities in the UK.
"The company faced increasing difficulties with its bankers despite having considerable funds in its account, which should have left the company solvent,” David Buchler of Buchler Phillips told AirCargoNews late last year. "The appointment of administrators at CargoLogicAir is a very unfortunate, unintended consequence of sanctions generally applied against British businesses perceived as Russian controlled. This is a unique British business performing a valuable commercial service to British customers trading overseas, employing British people and paying British tax.”
Buchler Phillips now says GBP17.1 million pounds (USD21.22 million) can be realised, including GBP10.6 million (USD13.15 million) in cash, GBP3 million (USD3.72 million) in tax refunds, and GBP2.2 million (USD2.73 million) in aircraft spares. CargoLogicAir had also paid GDP4.3 million (USD5.34 million) in deposits, but the administrators say the recovery of those funds is "uncertain" and may involve legal action.
Buchler Phillips has also reportedly made progress in talks with the OFSI, who have issued the airline a draft licence to do business pending a final licence. That licence is likely to ease the way to dealing with entities such as banks. Notably, that final licence is needed to lift a block on the aircraft inventory software that will allow the administrators to start selling the aircraft spares. Buchler Phillips says all creditors, including Isaikin, can expect to be paid in full once the barriers to asset retrieval and sale are removed. Unfortunately for Isaikin, payments made to him will immediately be frozen.
CargoLogicAirlines retired its B747-400FSCD in August 2022. That plane is now owned and flies for National Airlines (N8, Orlando Sanford) as N537CA (msn 33749). However, the airline has retained its B747-400ERF, G-CLBA (msn 32870), and is stored at Frankfurt Hahn Airport.
