Court accepts Aer Arann rescue plan

The High Court has approved a rescue plan for Aer Arann, allowing the airline to come out of examinership.

Yesterday, Ms Justice Mary Finlay Geoghegan said she was satisfied to approve the scheme of arrangement prepared by the airline’s examiner, Michael McAteer of Grant Thornton, once certain modifications are made to the scheme.

The scheme had been approved by the majority of the airline’s creditors.

The court also heard the Revenue Commissioner was prepared to drop its initial objections to the scheme being approved.

Under the modified proposals Revenue will receive 22% of what it is owed within 29 days, with the remaining 78% to be paid within 18 months.

The court made its ruling after receiving submissions from Mr McAteer in response to “serious and significant concerns” expressed by the judge last week over the scheme.

She had previously said the court could not approve the scheme unless it was satisfied the airline, which employs 300 people, had a reasonable prospect of survival. She said she had insufficient information on a number of matters.

Yesterday, after receiving additional material from the examiner the judge said she was satisfied the modified scheme allowed the court form the view that the airline had a reasonable prospect of survival as a going concern. Those modifications include clarifying which classes of the airline’s creditors come within the scheme and which do not.

The judge also heard an additional €2.2m outside the scheme of arrangement is to be invested. That new investment is to be provided by businessman Timothy Kilroe Jnr. Mr Kilroe’s late father Tim Snr was a well known businessman who sold Aer Arann to current owner Galway businessman Pádraig Ó Céidigh during the 1990s.

That investment was dependent on the scheme getting approval from the court. The court previously heard as part of the scheme of arrangement, €3.5m from a group comprising British transport company Stobart and Mr Ó Céidigh, the airline’s owner, is to be invested in the company.

Rossa Fanning for the examiner thanked the judge for her speedy decision, as it was in the airline’s commercial interest for the scheme to be approved as soon as possible.

Counsel said the court was being provided with comprehensive material from the examiner, which would allow it to come to the conclusion that the airline has a reasonable prospect of survival as a going concern.

Counsel said figures prepared on behalf of the examiner projected that the airlines would grow in the next few years. Counsel added the airline expects to make a profit in 2011 and 2012.

The airline went into examinership after the High Court was informed it was insolvent and unable to pay its debts.

Creditors are owed more than €29m with AIB owed €5.2m, the largest creditor.

The survival plan has secured the support of nine out of the 12 classes of creditors, including AIB.