A High Court judge has expressed “serious and significant concerns” about a proposed survival scheme for Aer Arann and has adjourned to next week the company’s bid to secure the court approval of the scheme necessary to exit examinership.
The Revenue Commissioners have objected to the scheme, alleging they are being treated unfairly as they will receive a a smaller dividend than other creditors.
Today Ms Justice Mary Finlay Geoghegan said she had “great concerns” over the scheme of arrangement put together by Aer Arann’s examiner, Michael McAteer of Grant Thornton, which was put before the court for approval.
Isses about proposed new investment needed to be clarified and there was also insufficient information about the terms on which creditors were to be paid, and when this was to happen, the judge said. She was also concerned that a statement of affairs, listing the airline’s assets and liabilities, had not been included in the propoals put before the court.
The issues she was raising were “very, very serious” and needed to be addressed because the court could not approve the scheme unless it was satisfied the airline has a reasonable prospect of survival as a going concern, she said.
The scheme, which has secured the approval of nine of 12 classes of creditors, will see some creditors receive all the money owed to them while other creditors, including the Revenue, will receive no more than 22 per cent of what they are owed. The airline’s creditors are owed some €29.5 million, with Allied Irish Banks the largest creditor owed €5.2 million.
As part of the survival scheme, some €3.5 million from a group comprising UK transport company Stobart and Galway businessman Pádraig Ó’Céidigh, the airline’s owner, is to be invested in the company.
Of that initial investment, €1.8 million will be paid to creditors, €400,000 will go towards fees for the examinership process and the balance will go towards working capital.
Ms Justice Finlay Geoghegan said there were a number of uncertainties in the scheme as proposed, including about investment and payments to creditors. “There must be certainty in every scheme of arrangement so that everybody understands what is contained in the scheme,” she said.
Jennifer O’Connell, for the Revenue, said its concern was that other creditors, such as Aer Lingus and the Dublin Airport Authority who would normally rank behind Revenue in the event of the airline being wound up, were being paid all they were owed while Revenue was to receive considerably less.
Revenue is owed €436,842 as a super preferential creditor and €685,000 as a preferential creditor in PAYE and PRSI payments but, under the terms of the scheme, Revenue would receive €181,000, counsel said.
Rossa Fanning, for the examiner, said his client would address the issues raised by the judge on Monday. For commercial reasons, his client was anxious to have the matter dealt with as soon as possible, counsel added.
Counsel added Mr McAteer was aware of the Revenue’s concerns and had done his best to address them but, if the modifications sought by Revenue were put in place, that would effectively put the airline in liquidation.
The judge has adjourned the case to Monday to allow the examiner address the issues raised by the court and by Revenue.