The High Court confirmed restructuring proposals for five companies in the Norwegian Air group, finding them fair and equitable despite the fact that the required investment had not yet been secured. The schemes will not take effect unless the group raises at least NOK 4.5 billion, obtains approval from a Norwegian court and satisfies other conditions.
Mr Justice Quinn gave judgment on 22 April 2021, summarising his reasons for an order he had made on 26 March confirming the examiner’s proposals under section 541 of the Companies Act 2014. The companies are Arctic Aviation Assets DAC, Norwegian Air International Limited, Drammensfjorden Leasing Limited, Lysakerfjorden Leasing Limited and Norwegian Air Shuttle ASA. Torskefjorden Leasing Limited, also in examinership, was wound up in January after the examiner concluded he could not formulate a scheme for it following the group’s decision to end long-haul operations.
Members of each company approved the proposals, and at least one creditor class in each company did so. Some creditor classes did not approve, but no party opposed confirmation at the hearing. The court nonetheless had to decide whether the proposals were fair and equitable and not unfairly prejudicial.
The plans centre on Norwegian Air Shuttle ASA, the group’s parent. They provide for a NOK 500 million cash pot and creditor claims that may be converted into shares, alongside a rights offering, private placement and perpetual bond offering. The group aimed to reduce its fleet and focus on Nordic and European short-haul flights. The examiner projected that the schemes would produce a better return for creditors than liquidation and help the companies continue as going concerns. The judge accepted that evidence, while noting the outcome depended on successful implementation.
The court treated the schemes together because the companies’ liabilities, guarantees and cash arrangements were closely connected. It found the proposed releases of liabilities between companies in examinership were permissible in the circumstances. It also confirmed Norwegian Air International’s scheme despite the Environmental Protection Agency’s opposition to its proposed treatment as an unsecured creditor. The judge found no statutory priority for the relevant pecuniary claims, but did not decide whether paying the scheme dividend would satisfy emissions regulations or prevent a possible operating ban.
The schemes’ proposed effective date was 26 May 2021, with a possible extension subject to a 30 June long-stop date. If the conditions, including the minimum investment, were not met by then, the schemes would not take effect and creditors’ claims would not be impaired or written down. The judgment records the court’s confirmation; it does not establish that the funding or other conditions were subsequently achieved.