Norwegian examiner has month to finalise rescue plan
High Court extends examinership as $2.5bn of group debt discharged
Norwegian and five Irish subsidiaries are under High Court protection from creditors since mid November, when it had debts of more than €4 billion, while Mr Wallace puts together a rescue plan for the airline group. Photograph: iStock
Norwegian Air Shuttle’s (NAS) High Court-appointed examiner has another month to finalise a rescue plan for the troubled airline group.
NAS and five Irish subsidiaries, which lease much of its fleet, got High Court protection from creditors, then owed more than €4 billion, on November 18th, when Kieran Wallace of KPMG was appointed examiner to the companies.
Mr Justice Michael Quinn extended the examinership to February 25th at a High Court hearing on Friday to allow Mr Wallace finalise a rescue plan, known as a scheme of arrangement.
Paul Sreenan, Mr Wallace’s senior counsel, told the court that the examiner was seeking to extend the period by a further 30 days as it would be “more advantageous” to creditors.
“NAS is in discussions with a number of investors and they are confident about that investment being forthcoming,” Mr Sreenan said.
The court heard that $2.5 billion (€2 billion) of the group’s debt has been discharged. NAS management has a business plan involving raising up to €490 million and the closure of its long-haul operations.
Courts appoint examiners to troubled companies for an initial 70 days, but can extend the period by a further 30 days.
None of the creditors represented, including two of the largest, Irish aircraft leasing giant Aercap and Bank of China Aviation, objected to Mr Wallace’s motion to extend the examinership.
Counsel for manufacturers Airbus and Boeing, which are also among the group’s creditors, confirmed that neither multi-national intended objecting to Mr Wallace’s request for an extension. The issue is due back before Justice Quinn on February 25th.
Lawyers for the companies told the court that Norwegian intended repudiating leases over aircraft held by the Irish subsidiaries. The judge said he would deal with this issue on January 28th.
The group intends cutting its fleet to focus on short-haul flying within Europe. Mr Sreenan said this would mean that the group will have to cut a significant number of jobs, but he did not give an exact figure.
Norwegian had more than 10,000 workers in 2019, before Covid-19 restrictions grounded air travel last year. About 50 people work for the Irish subsidiaries.
Justice Quinn ordered a fifth company, Torskefjorden Leasing Ltd, to be wound up last week following an application by Mr Wallace. That business leased 24 Boeing long-haul jets which the group will no longer need.
The companies remaining in the examinership hold 48 aircraft. Norwegian’s total fleet was 140. Irish subsidiaries hold the remaining 68 planes that were not included in the examinership.
NAS management is understood to have been in talks with lessors on the future options for these aircraft.
Mr Sreenan said that Mr Wallace’s scheme of arrangement would deal with refunds due to passengers for cancelled flights.
Along with most other European carriers, NAS had to cancel large numbers of flights in the spring when governments imposed wide-ranging travel bans to curb Covid-19’s spread.
The court will have to approve any scheme of arrangement, which will first have to get the backing of at least one class creditors whose rights the plan affects.
Any creditors opposing the plan must demonstrate that they would fare better in a liquidation or receivership to convince the court to strike it down.
Oslo-based NAS is also going under the protection of Norway’s courts. However, the Irish examinership is the “lead” process.
NAS chose the Irish courts to oversee its rescue as its aircraft, the group’s main assets, are held by companies registered in the Republic, allowing it to claim this jurisdiction as a main centre for its operations.
The group companies’ finances are closely intertwined revenues from flights sold by the parent, NAS, provide the subsidiaries with the cash they need to operate and lease aircraft.