Collapsed UK carrier Monarch Airlines’ administrator has effectively completed the aircraft returns process, having opted against legal challenges to lessor claims.
While lessors were required to account for security deposits and maintenance reserves held by them, most of the lessors had submitted substantial counter-claims.
Administrator KPMG had sought legal advice to clarify the lessors’ rights to apply set-off, and has accepted that the lessors have a strong case.
“Based on the counter-claims received from lessors to date, the value of [their] claims significantly exceed the value of the security deposits and maintenance reserves held by them,” it states.
“The legal advice we have received confirms that the lessors have reasonable grounds on which to apply set-off and the costs of challenging this through litigation would be prohibitively expensive.”
As a result, the aircraft returns process appears to be “fully completed”, says the administrator.
KPMG also notes that maintenance firm Monarch Aircraft Engineering (MAEL) – which continues to trade – has recently proposed a company voluntary arrangement, a process under which a company reaches a voluntary agreement with creditors for debt repayment.
MAEL’s shares are owned by an entity called ‘Monarch 2011’, which is also in administration.
KPMG had previously stated that this investment by Monarch 2011 would be “realised for maximum achievable value”.
But in its latest progress update on the administration, it says that a new funding package and the restructuring of MAEL’s balance sheet includes the sale of Monarch 2011’s shareholding to Petrol Jersey Limited for just £1.
Petrol Jersey Limited, based in the Channel Islands, is Monarch’s senior secured creditor.
Source: Cirium Dashboard