Limerick aircraft company given permission to seek arrangement with creditors
The High Court has given Irish based aircraft company Nordic Aviation Capital the go ahead to seek to enter into a scheme of arrangement with its creditors.
The NAC group of companies is the largest lessor of aircraft to regional airlines, and the 5th largest aircraft lessor in the world, and employs over a 100 people at its Limerick Headquarters.
Nordic Aviation Capital DAC wants to enter into scheme with its lenders due to the dire effects of the Covid-19 pandemic on the aviation industry.
If approved the scheme will secure a six to 12 month standstill on millions of euro in principle and interest payments due by NAC to its lenders of approximately €5 billion of debt.
The scheme will also allow the group, which owns approximately 500 aircraft to continue to operate.
Seeking various orders under the Companies Act yesterday (Tuesday) Lyndon MacCann SC, appearing with Kelly Smith Bl for NAC, told the court the pandemic has had a significant impact on the group's business.
Some 65 of the group's 75 customers are seeking various concessions on its aircraft leasing agreements.
There has, the court heard been a substantial decrease on the amount of money paid to the group. In April it only collected 20% of what it is due from airlines that have leased its aircraft.
It is estimated that its cash collections for June and July will also be very poor.
Counsel said the group fears it will run out of cash in July, and that it could breach agreements it has entered in terms of its repayments to its creditors by the end of the month.
As a result the group seeks to enter into a scheme of arrangement with its creditors counsel said.
Counsel said that other parts of the proposed scheme include that NAC shareholders will inject a total of US$60m into the group, and will reduce non essential expenditure, and cut costs.
For the duration of the pandemic it also proposes to eliminate an uncommitted proposed capital expenditure programme for 2020 to 2025 of US$5.7 billion.
It further seeks to secure deferred payments under a committed capital expenditure programme of US$1.5 billion, and reduce the proposed delivery of 21 new aircraft down to eight.
Counsel said it would be "ominous" for the company unless that scheme could be agreed,
M Mr Justice David Barniville made orders admitting the company's case to the fast track Commercial Court list, and formally gave it permission to convene meetings with its creditors.
The applications were made on an ex-parte basis. However several of NAC's creditors had representatives in the courtroom observing the proceedings.
Brian Kennedy SC told the court that he represented a group which holds a total of 69% of the NAC's unsecured debt.
Counsel said while his client had no right to be heard during the hearing, he said his clients are opposing the proposed scheme.
