The administrator of CargoLogicAir (P3, London Stansted) has criticised Microsoft for failing to grant access to the insolvent airline's Azure and 365 subscriptions, which she says is "severely hampering" the administration's progress. Joint administrator Joanne Milner made the comments in a June 14, 2024, progress report.
The airline's sole shareholder is Cargo Logic Holdings Ltd. Its ultimate owner, Alexey Isaykun, fell afoul of sanctions imposed on Russian entities and individuals as a result of that country's invasion of Ukraine. Cargo Logic Holdings, and by default, CargoLogicAir, went into administration in November 2022 as it could not trade properly once Isaykun was sanctioned. Buchler Phillips was appointed as administrator. In November 2023, the company was dissolved via a compulsory strike-off, ceasing to exist as a legal entity. Shares became vested in the Crown. Isaykun is the founder and majority owner of Russia's Volga-Dnepr Group.
At the time CargoLogicAir went into administration, it was operating a single B747-400ERF registered as G-CLBA (msn 32870). The aircraft operated scheduled and chartered freight services between the UK, Asia, Africa, and the Americas. Until the sanctions impacted, it was profitable.
While the sanctions are impacting the administrator's ability to settle the airline's affairs, they have saved their harshest criticism for Microsoft Ireland Operations Ltd. Because of the sanctions regime, easy access to the airline's electronic records has been blocked since July 2022. However, since then, the administrators have managed to gain access to employee's mailboxes but have been blocked from accessing the Microsoft Azure and 365 platforms.
"We, along with the company's IT agents, ITVET Ltd, have actively chased Microsoft Ireland Operations Ltd for updates since the beginning of the administration," Milner wrote. "However, these requests have been ignored."
Milner says that because the blocked access is hampering the administration's progress, lawyers have been instructed concerning securing access and possible damages claims against Microsoft. She says that since threatening legal proceedings, Microsoft has begun engaging (via their legal representatives) and is aware of the importance of the data.
"We have stressed that the data contained in the Azure subscriptions is essential for the administrators to carry out their statutory duties," adds Milner. "The company's data is held by Microsoft and is needed for the company to pursue its book debts. The banking protocol requires the administrators to provide copy invoices before (bankers) NatWest will accept any monies into the account. The lack of records is hindering the collection of book debts."
Milner says the administrators also believe the Microsoft subscriptions may have been de-provisioned, and Microsoft may have permanently deleted the records. "We believe the Azure subscription is where the financial records are held, and this was de-provisioned on October 27, 2022, despite the sanctions and Microsoft not being instructed to deprovision the services," she wrote. We have requested Microsoft to explain, from a technical perspective, how the data can be recovered, however expensive or time-consuming this may be."
Milner says Microsoft's response will be discussed with its legal advisors once it is received. She adds that if book debts and other assets cannot be collected because of the absence of records, a claim against Microsoft will be considered.
In her report, Milner stresses the time and resources the administrators and their legal advisors have spent trying to obtain CargoLogicAir's financial records. She says the lack of records affects the realisation of assets and is potentially deleterious for creditors.
Unless there is a further extension of time, Buchler Phillips administration of Cargo Logic Holdings Ltd, will end on November 16, 2025.
