Ireland’s High Court has given Norwegian (Oslo Gardermoen) approval to terminate lease contracts for 25 aircraft that had been signed with four of its creditors. This means the airline can now present a final proposal on a full rescue plan to the court, E24 Næringsliv reported.
Last week, it was confirmed that Norwegian had reached an agreement with a fifth creditor, ICBC Industrial and Commercial Bank of China, to cancel a contract for ten aircraft. That left 25, belonging to Bank of Utah (eight B737s), Citibank (six B737s), Crédit Agricole CIB (nine B737s), and Luxembourg’s Apollo PK AirFinance (two B737s).
These are the remaining aircraft that Norwegian had itself failed, during negotiations, to cut from the trimmed-down fleet specified in its rescue plan. But Judge Michael Quinn gave Norwegian permission to terminate the contracts at will. The judge made it clear that he was terminating all warranties and leases associated with these aircraft.
Stephen Walsh, a lawyer representing Citibank and the Bank of Utah, had argued that he and his clients had received too little information from the airline to be able to make an assessment of the case. He also accused the airline of disposing of more aircraft than it needed to.
The ruling removes the last major obstacle before Norwegian can present a final proposal on a rescue plan, its so-called “scheme of arrangement”, to creditors to vote on. Under the Irish examinership process, a majority in one creditor group is sufficient. According to E24 Næringsliv, all indications are that Norwegian has secured a majority among lessors, which make up the largest group of creditors.
If one group of creditors says yes, the judge must ensure only one thing; that no creditors emerge from the plan worse off than they would in a bankruptcy. However, creditors can still appeal. In addition, the plan must obtain approval in Norway, where the carrier is also under bankruptcy protection.
