IRS gives in to Nordic bankruptcy proposals

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The US tax authorities have lifted their objection to the bankruptcy plan of Limerick-based aircraft lessor Nordic Aviation Capital.

ordic Aviation Capital (NAC) is seeking to get out of a debt of less than 6.3 billion dollars (5.8 billion euros) by selling it to lenders.

The U.S. Internal Revenue Service said in a filing on April 15 that it was withdrawing its objection to the bankruptcy plan on the condition that lenders pay all administrative claims without the IRS having to file. a request about them.

The IRS raised a last-minute objection to the plan last week on technical grounds.

NAC began bankruptcy proceedings under US Chapter 11 in December 2021, with a final hearing in the case – when a US court in the state of Virginia will be asked to approve the deal. restructuring of NAC with its creditors and debtors – scheduled for tomorrow.

The outstanding tax liability owed by Nordic is modest, approximately $250,000.

NAC is the world’s largest regional aircraft lessor, with a fleet of around 500 aircraft leased from airlines such as Lufthansa in Germany, TAP in Portugal and Air France.
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The lessor has been hit hard by the pandemic and suffered a massive $1.2 billion loss last December alone, US court documents showed.

It posted losses of nearly $2.4 billion for the year to June 2021.

NAC began bankruptcy proceedings on Dec. 19 after reaching a consensual settlement with lenders who hold more than 73% of the lessor’s $6.3 billion in debt.

Following the Chapter 11 process, the reorganized company would be majority-owned by its major creditors.

The deal involves a sweeping restructuring of Nordic’s debt obligations, including the conversion of a substantial amount of debt into equity and an injection of $537 million in fresh capital, via a $337 million equity rights offering. dollars and a $200 million revolving credit facility.

The company also secured an additional $170 million debtor-in-possession financing facility from its existing creditors to help fund operations during the Chapter 11 process.

Chapter 11 protects businesses from creditors and businesses while debts are reorganized.

Unlike the review in Ireland – which could have been an alternative for the NAC – companies filing for Chapter 11 bankruptcy do not need to be insolvent to benefit from the procedure, which makes it more attractive in some cases.

Nordic said in December that its restructuring plan “will place the company in a strong financial position to continue its global operations” and that it will “continue to meet substantially all of its obligations to employees, customers and suppliers”.

NAC – whose CEO and chairman is former GE Capital Aviation Services (Gecas) boss Norman Liu – recently appointed a number of former senior Gecas executives to senior positions as it navigates its bankruptcy .

Among them is Mike Jones, who has been named executive vice president of global marketing.

He was previously Executive Vice President of Emerging Markets at Gecas.

Gecas was acquired by Dublin-based AerCap last year, creating the world’s largest aircraft lessor.

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