The High Court has ruled that a €502.7 million claim by the liquidators of French airline Air Lib in the winding-up of Flightlease Ireland Ltd must be assessed by the Irish courts under Irish insolvency law.
Mr Justice Murphy decided preliminary legal questions arising from the voluntary liquidation of Flightlease, whose holding company had been Swissair. Flightlease had creditors’ claims of about €290 million but assets of approximately €13 million.
The dispute followed proceedings launched in France in November 2001 by Air Lib and its holding company, Holco, against several defendants including Flightlease. Those proceedings sought approximately €503 million. Air Lib itself entered liquidation in February 2003.
Air Lib subsequently lodged a claim in Flightlease’s Irish liquidation. Flightlease’s liquidator rejected that proof of claim on January 24, 2005. Air Lib also sought a stay of the Irish liquidation, while Flightlease wanted the winding-up to proceed.
The central question was which country’s insolvency law governed Air Lib’s claim. Under Article 4 of Council Regulation 1346/2000, the law of the Member State where insolvency proceedings are opened generally governs their conduct, including the lodging, verification and admission of creditors’ claims.
Because Flightlease’s centre of main interests was in Ireland, the High Court held that Irish law applied to Air Lib’s proof of debt. Mr Justice Murphy said this approach ensured creditors in the same insolvency were treated according to a common set of rules rather than potentially different national rules on matters such as priority.
The court separately considered Article 15, which creates an exception for certain lawsuits already pending in another Member State. It held that the French proceedings did not qualify because they concerned a monetary claim rather than a specific asset or right of which Flightlease had been divested.
The court therefore answered the principal questions in Flightlease’s favour. The procedural steps for Air Lib’s appeal against rejection of its proof were left undecided by agreement between the parties.