The High Court has been asked to wind up two Irish-registered aircraft and ship leasing companies that are part of a group ultimately owned by the Russian Federation.
If the court agrees to appoint liquidators to GTLK Europe DAC and GTLK Europe Capital DAC, which have an estimated worth of $4.5 billion (€4.11 billion), it would be the largest winding up in the history of the State.
The court heard from lawyers acting for four petitioning creditors of the company that the economic sanctions imposed on Russia following the invasion of Ukraine in February 2022 have had “a devastating effect” on the GTLK Europe Group.
The creditors claim the group is no longer able to conduct any business as the sanctions have led to the termination of lease agreements and the freezing of the group’s assets.
GTLK Europe’s international leasing business is headquartered in Dublin, and the entities subject to the proposed wind-up are at the top of the group’s structure.
The four creditors that have petitioned the court for orders winding up the GTLK firms are: Dublin-registered Trinity Investments DAC; Attestor Europe Multi Asset Portfolio, which is a sub-fund of Attestor Capital ICAV; Ben Oldman Special Situations Fund LP; and Sona Credit Master Fund Limited. The latter two companies are registered in the Cayman Islands.
The four creditors claim they are owed $178 million (€162.5 million) by GTLK Europe. They claim they entered into a series of agreements to refinance existing debt, where they advanced significant funds to GTLK Europe Capital, of which GTLK was a co-guarantor.
Counsel said that following the imposition of the sanctions there had been significant default by GTLK Europe Capital regarding its repayment obligations, specifically the requirement to repay interest due on the loans.
The creditors claim the group has not satisfied their demands for repayment and, in a petition to the High Court, say the Irish-registered entities and associated group of companies are unable to pay their debts, are insolvent and should be wound up.
On an ex-parte basis, the matter came before Mr Justice Brian O’Moore on Wednesday afternoon. He made various directions in the creditors’ application.
Kelley Smith SC, instructed by William Fry Solicitors, for the creditors, told the court that GTLK is Russia’s largest leasing business.
It is ultimately owned by the Russian Federation’s ministry of transport. Several directors of GTLK’s ultimate parent are government ministers or deputy ministers in the Kremlin.
Counsel said the company, through a complex corporate structure, holds assets including 70 aircraft and 19 sea vessels. Its customers include airlines Aeroflot, Emirates and EasyJet.
Counsel said that arising out of the sanctions the group’s lease should have been terminated and the firm would retake possession of its assets. However, it was not clear if any such steps have been taken, particularly within Russia where the majority of the aircraft are located. Those aircraft continue to be operated by Russian airlines within Russia and have been wrongfully re-registered in Russia, counsel said.
Russian-operated aircraft certificates of airworthiness have been suspended by certain aviation authorities. There were also concerns over what insurance cover, if any, is in place in respect of those aircraft.
Counsel said that since the sanctions were imposed the Irish directors of the two companies have resigned along with the companies secretary and auditors.
It was also unclear if Irish-based solicitors are continuing to act for or to advise the two companies, counsel said. Their current directors and secretaries are Russian nationals and entities, counsel said.
Ms Smith said her clients’ solicitors attempted to make contact with GTLK Europe well in advance of making their demands for repayments. However, there has been no response to their communications.
It was therefore unclear if GTLK will contest the winding-up petitions.
Counsel said her clients wish to put various other parties on notice of the proceedings, including the Irish Central Bank and its equivalents in the United States and the UK.
The creditors, whose petition is being supported by other creditors of the group, are seeking to have Damien Murran and Julian Moroney of Teneo Restructuring Ireland appointed as joint liquidators to the companies.
After considering submissions from counsel, Mr Justice O’Moore agreed the winding-up application is urgent. The judge said it was important to establish what parties want to get involved in the proceedings and whether the application to wind up the GTLK companies would ultimately be contested.
The matter was adjourned to a date in May.
