Ireland Is A Centre Of Excellence For Aviation Restructuring

• Published date: 04 October 2021
• Subject Matter: Transport, Insolvency/Bankruptcy/Re-structuring, Financial Restructuring, Insolvency/Bankruptcy, Aviation
• Law Firm: Matheson
• Author: Mr Stuart Kennedy, Rory McPhillips, Yvonne McWeeney, Stephen Gardiner, Julie Murphy-O'Connor, Tony O'Grady and Brendan Colgan

The country has been a centre of excellence for aviation financing, and now it is leading the way in aviation-related multijurisdictional restructurings, writes Irish law firm Matheson.

There are a number of well-known reasons why Ireland continues to attract investment in aviation: its favourable tax regime; a wide double tax treaty network; ease of access to the EU and OECD; a welldeveloped common law legal system; decades of professional experience and expertise in aviation; and a competitive business environment.

These factors, combined with a government which is committed to growing and supporting the industry, mean that Ireland is the obvious location to acquire, finance and lease aircraft.

The COVID-19 pandemic had a major impact on the aviation sector in general, and highlighted some of the challenges and complexities involved in crossborder insolvencies and restructurings, having regard to the jurisdiction of the airline's/lessor's centre of main interests and the location of its assets. Despite the pandemic, Ireland continues to build on its global reputation and thrive as a centre of excellence for aviation finance. This enviable position which Ireland has achieved has been further enhanced having regard to the approach of the Irish High Court over the past 18 months to approve the use of both schemes of arrangement and examinerships, the two principal Irish restructuring tools, to facilitate complex multijurisdictional aviation restructurings.

Schemes of arrangement

A scheme of arrangement is a statutory procedure under Part 9 of the Irish Companies Act 2014 (as amended), which is very similar to a scheme of arrangement under the laws of England and Wales. It is a flexible restructuring tool, requiring: the approval of at least 75% in value and also a majority in number of each scheme meeting of affected creditors, and court approval to be binding.

A significant distinction between an Irish scheme of arrangement and its counterpart in England and Wales is that an Irish court may, on application, grant a moratorium with regard to creditor actions to facilitate the formulation and approval of the scheme. This is a feature of examinership also - the more widely used restructuring process in Ireland, although, in the case of examinership, the moratorium automatically commences on the court filing for examinership (or on the appointment of an examiner - interim or otherwise - in the case of a related company).

The directors and shareholders are...