Judge has 'concerns' over Aer Arann's rescue plan
Published 30/10/2010 | 05:00
A HIGH Court judge yesterday expressed "serious and significant concerns" about a survival scheme for Aer Arann, the troubled airline that formally went into examinership last month.
Ms Justice Mary Finlay Geoghegan adjourned until Monday a hearing over whether the company should be allowed to exit examinership.
The Revenue Commissioners has objected to the survival scheme being led by the airline's chairman, Padraig O Ceidigh, claiming it is being treated unfairly because it would get a smaller payment than other creditors.
Ms Justice Geoghegan said she had "great concerns" over the scheme put together by Aer Arann's examiner, Michael McAteer of Grant Thornton.
She was raising what were "very, very serious issues" because the court lacks the jurisdiction to approve the scheme unless it is satisfied that the airline has a reasonable prospect of survival as a going concern.
The scheme, which was secured with the approval of nine of the 12 classes of creditors, will see some creditors receive all the money they claim they are owed. However, other creditors, including the Revenue Commissioners, will receive no more than 22pc. The total owed by Aer Arann is around €29.5m; with Allied Irish Banks, its largest creditor, owed €5.2m.
Counsel for the Revenue Commissioners said their concern was that other creditors, such as Aer Lingus and the Dublin Airport Authority, who would normally rank behind them in the event of the airline being wound up, were to be paid all they were owed.
The Revenue is owed €436,842 as a super preferential creditor, and €685,000 as a preferential creditor. Under the terms of the scheme Revenue would receive just €181,000, counsel said.
The court heard that as part of the survival plan, there would be an investment of €3.5m in the airline. UK transport logistics group Stobart has pledged to make €2.5m in funding available to support the launch of Aer Arann services to London Southend Airport, which is owned by Stobart. Mr O Ceidigh will provide additional funding for the airline.
A spokesman for Aer Arann declined to comment on yesterday's proceedings.