Russian State-Owned Lessors Bid to Avoid Irish Liquidation Order

Peter O'Dwyer, Bloomberg News

The interior of an Airbus SE A330 airplane during a tour of a new maintenance hangar and control tower, at Chateauroux-Centre "Marcel Dassault" Airport in Chateauroux, France, on Friday, July 1, 2022. Many airlines struggled to see a future for their enormous Airbus SE A380s when the pandemic grounded fleets in early 2020 but France’s Chateauroux airport, about 250 kilometers south of Paris, is opening their giant hanger equipped to handle the double-deckers and up to five or six narrow bodies. Photographer: Benjamin Girette/Bloomberg , Bloomberg

(Bloomberg) -- Two state-owned Russian leasing firms based in Ireland have sought to prevent the appointment of a liquidator to wind-up their affairs by lodging a “last minute” application for an examiner to be appointed.

The Irish High Court was due to hear an application on Monday brought by four of the firms’ creditors for the winding up of Kremlin-backed aircraft and shipping leasing firms GTLK Europe DAC and GTLK Europe Capital DAC. The application was brought on the basis that the firms were insolvent and unable to pay their debts.

The companies on Friday brought an application for an examiner to be appointed after debts of $1.5 billion were forgiven by the Russian government.

Examinership is a mechanism provided for the rescue and return to health of ailing, but potentially viable companies. The company has to have a reasonable prospect of survival.

The “last-minute” timing of the examinership application so close to the intended winding-up hearing was “profoundly suspicious,” Judge Brian O’Moore said on Monday.

The court also heard a notice of intended arbitration in the UK was served by lawyers acting on behalf of the firms on Saturday and the companies had indicated they planned to seek to injunct the winding-up petition hearing in Dublin to allow it to take place.

The judge described the developments as “extraordinary” and said the result was a set of “very unusual if not unique circumstances”.

The firms had not been “candid” with the court with regard to the solvency of the company, he added. The companies had claimed in their submissions on the winding-up application that they were solvent but claimed in the examinership proceedings, on the basis of an independent expert’s report, they were cashflow insolvent, the court heard.

Kelley Smith, a lawyer for the creditors, said she had concerns about the bona fides of the firms and said the court was being “actively misled.” She described the companies’ bid to have an examiner appointed as an attempt to “derail or at the best least defer” the winding-up proceedings.

Counsel for the firms said they wished to proceed with the examinership application while Smith said her clients considered it to be “fatally flawed.”

A further hearing is scheduled for Tuesday morning.