The High Court has declared that pledge agreements covering 37 aircraft were void against the liquidators of GTLK Europe DAC and against creditors of several related companies, after finding that the charges had not been registered as required by Irish law.
In a judgment delivered on 19 December 2023, Mr Justice Rory Mulcahy also declared the agreements voidable at the companies’ instance for lack of corporate authorisation, and voidable under legislation on transfers intended to hinder creditors. The ruling followed an application by joint liquidators under section 631 of the Companies Act 2014.
The aircraft had an insured value of more than US$2 billion. The liquidators told the court they had found no evidence in company records that the boards had approved the pledges. The court also heard that the agreements secured loans from the companies’ Russian parent, JSC GTLK, and that the relevant pledges were executed in March 2022, shortly after Russia’s invasion of Ukraine and the introduction of EU sanctions.
The judgment records that JSC asserted ownership after enforcing the pledges outside court. It said notices of enforcement were served in May 2023, possession certificates were issued, and the aircraft were registered in Russia in JSC’s name. JSC did not participate in the Irish application. The judge rejected its suggestion that it could not receive a fair hearing in Ireland.
The court found the pledges were charges over company assets and that there was no evidence they had been registered. Under section 409 of the 2014 Act, the judge declared the charges void against GTLK Europe’s liquidators and against creditors of the related group companies. He also found no evidence of the required board and shareholder approvals for the security, making the pledges voidable at the companies’ instance.
The judge further held that the pledges were presumptively invalid as unfair preferences because they benefited a connected company within two years before liquidation. No evidence was presented to rebut that presumption. He declared the agreements voidable under section 74(3) of the Land and Conveyancing Law Reform Act 2009, finding that their necessary and probable consequence was to hinder creditors’ recovery.
The ruling did not determine whether the pledges or their enforcement breached EU sanctions. The judge said that question was not before him. Nor did he order the aircraft returned. The liquidators acknowledged that recovery appeared remote and said the declarations could assist their insurance claims in England and Wales. The court made no section 604 order concerning the related companies because they were not in liquidation.