High Court confirms examiner for Norwegian Air and related firms

Mr Wallace now has up to 100 days to put together a scheme of arrangement with the airline's creditors who are owed approximately US$5bn.

The High Court has confirmed the appointment of an examiner to the Norwegian Air airline, and several related companies in the group.

Mr Justice Michael Quinn confirmed the appointment of insolvency practioner, Mr Kieran Wallace, as examiner who had been acting on an interim basis.

Mr Wallace now has up to 100 days to put together a scheme of arrangement with the airline's creditors who are owed approximately US$5bn, which if approved by the High Court will allow Norwegian to continue to trade as a going concern.

There were no objections to the confirmation, with the vast majority of Norwegian's creditors adopting a neutral stance to the appointment.

Only one, Rolls Royce, said it was supporting the application, however there were no objections to Mr Wallace being confirmed as the examiner.

In his ruling today, Mr Justice Quinn granted the protection of the court from their creditors to Irish-registered Arctic Aviation Assets DAC, Norwegian Air International Ltd, Drammensf Jorden Leasing Ltd, Torskef Jorden Leasing Ltd, Lysakerf Jorden Leasing Ltd. Those firms are involved in activities including the leasing, management and subleasing of assets, including aircraft, and financing.

The judge said he was also satisfied to place their parent company Norwegian Air Shuttle ASA, which is Norwegian-registered, into examinership.

The judge said while the parent company's centre of main interest was outside of this jurisdiction, he was satisfied that it was capable of being included in a process being conducted in Ireland.

The judge accepted arguments by the airline's lawyers, Brian Kennedy SC and Declan Murphy Bl, that there is a sufficient close connection with the Irish entities and the parent that it was appropriate to appoint an examiner to all of them.

In addition, the judge noted evidence that the examinership process here is capable of being recognised by a Norwegian Court.

Evidence was given that the Irish process would also run parallel to but would take precedence over any action taken in Norway over the group's insolvency, the judge added.

As well as Ireland the airline has subsidiaries in Spain, the USA, Argentina, Denmark and the UK, which are not subject to the examinership process.

The judge said while the firms were insolvent and unable to pay their debts as they fall due, an Independent Experts Report (IER) presented to court stated that the firms have a reasonable prospect of survival if certain steps are taken.

These include the appointment of an examiner, the full implementation of a restructuring plan and the sourcing of additional financing.

The judge noted that the IER stated that creditors, which include aircraft leasing companies and financial lenders, would do better through a successful examinership process compared to if the group was put into liquidation.

After confirming Mr Wallace as examiner, the judge adjourned the matter to a date later this month.

The response from the airline's creditors

Paul Sreenan SC for Mr Wallace said that since his appointment last month his client has been working with the group and its creditors, and at this stage agrees with the IER that the airline can be saved if certain steps are carried out.

The group's creditors includes subsidiaries of Airbus, Boeing, aircraft leasing firms Avolon, lenders including the Export–Import Bank of the United States (EXIM) the US Government's official export credit agency, Wells Fargo, as well as Irish Revenue Commissioners.

Rossa Fanning SC for a group of creditors, including EXIM and aircraft lessors said his clients were not opposing the appointment. That response was guarded, he and his clients would engage with the examiner to see what comes out of a complex process. 

His clients are owed hundreds of millions of euro and counsel urged the court to exercise greater case management in the case given the scale of what is involved.

Last month the firms' board of directors petitioned the court for the appointment of an examiner.

They believe that the examiner can put together a survival plan based on factors including the group's core business is good.

In 2019, the group had employed over 10,000 staff and had operated 20 bases in 11 countries. However, last year was difficult for the group and it commenced several cost-reduction measures aimed at restoring it to profitability.

Last March, Norwegian was severely impacted by the outbreak of the Covid-19 pandemic, and had gone into hibernation.

The grounding of Boeing 737 Max and Boeing 787 Dreamliner aircraft, due to technical difficulties, had also adversely affected the airlines finances, the court also heard.

While it had entered into arrangements regarding its debts under a restructuring plan the Norwegian government announced earlier last month that it would no longer provide any more State financial support to the group.

Mr Kennedy told the court that the airline is hopeful that the Norwegian government may change its decision.

This resulted in several creditors commencing actions against the group, and the company seeking the appointment of an examiner.