The judge annuls four creditors – E24

The case is being updated …

Seven minutes after the extension, Judge Michael Quinn began the video court hearing from Dublin on Friday afternoon.

It had previously announced that it would make a decision on Norwegian’s request to terminate the contracts for 36 aircraft, and it did.

These are the planes that Norwegian itself could not get rid of in negotiations with creditors. Along the way, Norwegian has agreed with several of them.

As recently as Tuesday this week, it was confirmed that Norwegian had reached an agreement with ICBC (Industrial and Commercial Bank of China). Thus, they got rid of 10 of the 36 planes.

In the end, there were four financial creditors who have secured leases for a total of 25 aircraft.

The four-leaf clover has so far not been willing to voluntarily terminate the guarantee agreements and bear the losses that this entails. But now the Irish judge has given Norwegian permission to terminate the contracts against their will.

In November and December, Norwegian filed for bankruptcy protection in Ireland and Norway. Thus, the company’s struggle to survive entered the courts, which could lead to a legally sanctioned restructuring or bankruptcy and liquidation.

I think Norwegian took it too hard

The creditors in question are:

• US Bank of Utah – 8 flights
• Citibank – 6 fly
• French Credit Agricole – 9 flights
• PK Airfinance – 2 flights

The judge made it clear that he is terminating all warranties and leases associated with these aircraft.

“I have concluded that the court will approve the termination,” Quinn said in his review.

All the aircraft in question belong to Norwegian’s short-haul fleet, namely the Boeing 737 in various variants.

Stephen Walsh, the attorney representing Citi and the Bank of Utah, argued Tuesday that he and the clients had received too little information from Norwegian to be able to make an evaluation of the case.

He also argued that Norwegian would get rid of more aircraft than necessary, because they would like it, but that Irish law does not allow it. So the judge disagreed with this.

Ready to chord plan

The decision removes the last big hurdle before Norwegian can present a final proposal for a rescue plan, a so-called “settlement scheme,” to creditors.

This plan will likely also be made public through an announcement on the stock exchange on Monday morning.

All creditors are sent the plan with what it means to them. So that creditors can vote on the plan.

Everything indicates that Norwegian has secured the majority of the leasing companies. They constitute the largest group of creditors.

Under Ireland’s bankruptcy protection law, a majority in a group of creditors is sufficient.

If a group of creditors says yes, then the judge only needs to make sure of one thing: that no creditor comes out worse off the plan than they would in bankruptcy.

Friday’s verdict means that Norwegian’s chances of recovering alive from the Irish trial have risen sharply.

Take off at the end of April

However, it is enough that there are still obstacles. Even if the judge gives final approval in a separate “confirmation hearing” within a week, creditors can still appeal.

And the fresh money from new investors and the state is still missing. Norwegian has alleged indications of great interest, but has not signed purchase agreements.

But if all goes well, Norwegian will receive conditional permission from the judge to leave Ireland in mid-April. And a final liftoff from Dublin will take place when NOK 4.5 billion is in the account at the end of April.

Will reduce to a maximum free fleet of 53 aircraft

Norwegian announced earlier this year that the company decided to shut down its entire long-distance business.

The company has managed to reach an agreement with the owners of the long-haul Dreamliner aircraft, so the 34 aircraft were not part of the petition that was resolved on Friday.

Norwegian has also announced that it will reduce its short-haul fleet by approximately half to a total of 53 aircraft, of which 50 will be in operation and 3 in reserve.

This will be a pure fleet of 737 NGs (in Norwegian’s case, the 737-800 variant), with no 737 Max aircraft until further notice, according to the company’s chief financial officer.

Fleet downsizing is a central part of the rescue plan Norwegian is currently working on. It basically means that:

• The airline will reduce its fleet to 53 aircraft
• Between four and five billion will be raised in fresh capital
• The Norwegian state provides 1.5 billion in hybrid capital as part of the four to five billion framework
• Total (gross) debt will be reduced by more than half to 20 billion
• The company will move away from long distances and focus on Norway and on major routes between the Nordic region and European destinations.