The High Court approved three Norwegian Group companies’ unopposed application to repudiate contracts with nine counterparties, finding the contracts had continuing obligations and their termination would support the group’s restructuring. The court did not assess the counterparties’ losses or order a hearing to determine their amount.
Mr Justice Quinn delivered the judgment on 26 April 2021 under section 537(1) of the Companies Act 2014. The applicants were Arctic Aviation Assets DAC (AAA), Norwegian Air International Limited (NAI) and Norwegian Air Shuttle ASA (NAS), the group’s parent company.
The companies said the contracts had become surplus to requirements after NAS announced on 14 January 2021 that it intended to cease long-haul operations. Their proposed business plan focused on Nordic markets and a smaller fleet. The examiner supported the application, saying termination would help formulate schemes of arrangement, attract investment and remove ongoing obligations for services no longer needed.
The contracts included a lease at Boston Logan International Airport; fuel supply and storage arrangements at Los Angeles, Boston, San Francisco and Austin airports; agreements concerning equipment at Los Angeles International Airport; retail and catering services for NAS and NAI flights; and lease contract management services provided to AAA. The judgment examined the obligations in each agreement and concluded that both sides still had non-monetary performance obligations, making them eligible for consideration under section 537.
The court said its conclusions were informed by its analysis in an earlier judgment concerning other contract repudiations. In this application, the evidence was uncontradicted. Mr Justice Quinn found repudiation would facilitate proposals for schemes of arrangement and was necessary for the companies’ survival as going concerns. He approved the repudiations under section 537(1).
The order did not determine how much loss or damage any counterparty had suffered. Section 537(2) provides that a person suffering such loss as a result of an approved repudiation ranks as an unsecured creditor for the amount. The examiner said the proposed schemes would provide a process for quantifying claims, with unagreed claims assessed by an independent expert under the scheme. No party sought a section 537(3) hearing on quantum in this application, and the court made no order for one.