FT: Twitchy creditors threaten airlines
01.09.08
The aircraft detentions that led to the collapse of Zoom Airlines last week have led industry observers to suggest more of the same could be in store for other struggling airlines, the Financial Times reports. Although a string of airlines have folded this year, hit by soaring fuel costs and slowing business, Zoom's was dramatic for its speed and the surprise seizures.
Chris Boresjo, a partner in Simmons & Simmon's asset finance and leasing group, told the newspaper: ‘Airline creditors are twitchy right now. It could be a race to get to the aircraft since planes are subject to some chunky liens [legal charges].'
Liens can be held by the aircraft owners (if the plane is leased), mechanics and those who maintain it, airports with outstanding bills and other agencies, such as air traffic controllers. Because aircraft are moveable, one detention can rapidly lead, domino-style, to more as creditors rush to grab what they can.
Dan Hamilton, head of White & Case's financial insolvency and restructuring practice, told the Ft that seizures were likely in cases where one creditor thought there was a risk of another party jumping in first. He said: ‘You may see an increase in people trying to seize aircraft from smaller airlines, but equally most leasing companies don't want to be the first and be accused of causing the insolvency - you've got all the bad publicity of stranded passengers.’
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