Norwegian also seeks bankruptcy protection in Norway – E24

After Norwegian approved bankruptcy protection in Ireland on Monday, the airline will now begin a reorganization process in Norway as well.

– A parallel reconstruction under Norwegian law will be to the advantage of all affected parties and will increase the probability of a successful outcome. Our goal is to secure company jobs and help secure critical infrastructure and value creation in Norway, Norwegian CEO Jacob Schram says in a press release.

On Tuesday, Norwegian approached Asker and the Bærum District Court to begin reconstruction negotiations in Norway. That process would go hand in hand with the reorganization process in Ireland.

If the Norwegian district court grants bankruptcy protection, Norwegian will insure the largest companies in the group against bankruptcy and give you peace of mind for a few months. This includes:

• Parent company in Norway: Norwegian Air Shuttle (NAS)
• Irish airline Norwegian Air International (NAI)
• Arctic Aviation Assets (AAA), found on all owned and leased aircraft in Norwegian’s fleet
• Three other subsidiaries in Ireland

– We will now make good use of our time and work towards our goal of reducing company debt, reducing the number of aircraft in the fleet, and becoming an attractive company for investors again. We will be ready to face competition for customers after the corona pandemic, he continues.

The processes will have no impact on day-to-day operations and the company will continue to fly as planned. The rewards bonus program will continue to function normally as well, noted.

Both bonds and stocks will trade normally on the Oslo Stock Exchange.

It was notified

When Norwegian convened an extraordinary general meeting last week and laid out the main lines of the company’s new and second rescue package this year, it was also learned that Norway’s bankruptcy protection was relevant.

In addition to trying to achieve further debt reduction, cutting the number of aircraft in the fleet and taking other restructuring measures, Norwegian wants to raise up to $ 4 billion in fresh capital.

During the Irish court hearing on Monday, one of Norwegian’s Irish lawyers, Brian Kennedy, discussed how the airline’s Norwegian lawyers assessed the need for a trial in Norway as well:

“Although the major creditors will follow the inspection process, some smaller local creditors threaten to take legal action against the company,” Kennedy said during the hearing.

He also explained that a British court with “overwhelming probability” will follow the decision on bankruptcy protection of the Irish court. Kennedy based this on a statement by Daniel Bayfield, who has pledged to consider this issue.

Judge Quinn also asked if there were other jurisdictions beyond Norway and the UK that could influence the process when it comes to recognizing the Irish variant of bankruptcy protection.

– Something may need to be done under Chapter 15 in the US, but it shouldn’t be a challenge. If something happens, it will be fixed, but now we don’t see it as a challenge, Kennedy responded.

Law introduced urgently

The bankruptcy protection that Norwegian has now applied for in the Asker and Bærum District Court is governed by a relatively recent temporary law: the Reconstruction Act.

It was rushed in by the Storting this spring, following a government proposal. Such a law has long been under consideration in Norway, but when the crown pandemic struck, the case gained momentum.

In short, the law was passed because it wanted to prevent more companies from going bankrupt during the pandemic than necessary.

The idea is to be able to start negotiations with creditors earlier. The objective is to reach a voluntary or forced solution to avoid bankruptcy, if the company really has the right to life.

In October, Secretary of State Thor Kleppen Sættem walked out on E24 and announced that the government would make the law permanent. The temporary law expires on January 1, 2022, and the government is now requesting information on what the permanent law should look like.

At first, Norwegian was himself skeptical whether Norwegian law could benefit the company. The experts were divided.

One of the objections was that it was believed that Norwegian law would only protect and solve problems for the Norwegian side, by Norway or other groups with operations in several countries.

NHH professor Karin Thorburn noted that Norwegian has subsidiaries in Ireland and other countries, which would not be covered by the Norwegian reorganization plan.

Now that an Irish court has granted bankruptcy protection to Norwegian’s Irish subsidiaries and parent company on Monday, Norwegian bankruptcy protection will fully insure the airline against bankruptcy petitions in Norway.

Norwegian requests a rebuilding process in Norway