Experts believe that if Norwegian gets the green light after a trial in court on December 7, it has a good chance of survival. However, the bankruptcy attorney believes the current stock is worth zero.
When Norwegian filed for bankruptcy protection in an Irish court, the clock began to tick. Within 150 days, the airline must find a rescue.
However, to obtain protection during this period, the company must first obtain court approval, the decision was taken after a hearing to be held in Dublin on Monday 7 December.
The plan for Judge Michael Quinn to take office was announced on Thursday. It includes the full or partial cancellation of all debt in exchange for shares and the raising of billions of new capital.
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Think Norwegian will get the green light
Amanuensis Alexandros L. Seretakis of Trinity College Dublin, which specializes in Irish company law, believes the airline has good opportunities to do so.
– I think the court will accept it, because the Norwegian has a good chance of survival. Eventually, they will probably write off the debt and find new capital from the investor. They will likely remain a smaller company, says Seretakis to the E24.
– If they can come up with a viable plan for the Norwegians, which I think they will do, cut debts and find new capital. They will probably say that it’s hidden, which hurt the company, so the Norwegian will be able to continue operating in the world without COVID – he adds.
These two Irish gentlemen decide the fate of the Norwegians
On the edge of the cliff
Norwegian carried out a comprehensive rescue operation this spring, but realized the company needed more capital to recover from the crisis.
Travel restrictions caused by the pandemic reduced passenger numbers by 91 percent and caused Norway to deficit NOK 6.4 billion in the second and third quarters.
However, in autumn this year. The airline was rejected following a $ 1 billion direct state aid request, and on November 18, the company filed for the protection of Irish subsidiaries under an “examinership” scheme.
This means that creditors cannot pursue their claims or declare bankruptcy of the company as long as it has judicial protection.
Norwegian can continue its operations through this process, which is one of the advantages, Seretakis emphasizes.
Norwegian has no cash in January without bankruptcy protection
I have to convince the court
According to attorney Gavin Simons, most companies that are fully admitted to the “examination” process manage to restructure the company.
He works as a partner at AMOSS, a Dublin-based law firm, on corporate restructuring.
The law firm is also an Irish member of the international legal alliance Interlaw, of which the Norwegian law firm Haavind is a member.
– It’s not about “letting them in the exam and let’s wait and see if there are good prospects for survival.” The court must be convinced from the outset that there is a real chance of success in order to confirm the appointment of an “examiner,” says Simons.
The person designated as the so-called The court examiner (examiner) plays a central role in the work on sewing up a rescue plan. Auditor Kieran Wallace of KPMG was entrusted with a Norwegian assignment.
– In fact, only qualified companies leave the starting gate. And if they get out of the starting gate and get the necessary investment, they have a very good chance of finally passing the exam – says the lawyer.
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According to Simons, today’s shareholders take the least care of the court.
Since Norwegian filed for bankruptcy protection, this share has fallen by 20 percent, but market capitalization is still NOK 1.4 billion. Scandinavian petty savers are also still buying the company.
– They have a profit advantage in the company and therefore must also withstand the consequences of losses. When they go to court and claim that the company is insolvent, the value of this share is zero, says the lawyer.
A group of creditors can bind anyone
During the court-protected period, the auditor has to find a solution that includes debt cancellation and a new capital injection to Norway.
“He has to secure a new investment, formulate a debt settlement proposal, convene meetings with different classes of creditors, submit proposals to the vote,” says Simons.
Then it is enough for the creditor class to accept the solution. It also obliges other creditors.
– With the minimum level of support, it is imperative that the scheme is approved by the court and becomes binding on all creditors, whether they voted for or against the treatment they receive under the debt scheme, says the lawyer.
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In this process, creditors are divided into groups. They will only have part of their outstanding claim, the so-called “dividend”.
“Instead of paying them 100 percent, you can pay unsecured creditors 5 percent of the debt, while priority creditors like the tax authorities can get 15-20 percent,” says Simons.
However, creditors cannot be in a worse position than in a bankruptcy situation in which the company is divided and successively sold, i.e. Liquidation. In a recent report presented to the court, creditors forecast a loss of NOK 64 billion in the event of bankruptcy.
– The dividend paid to them must be at least equal to what the creditors would receive in the event of the liquidation of the company. He cares about historical obligations – says the lawyer.
He points out that the company may also have to sort out future obligations, such as aircraft leasing.
“The examination process can cope with historic commitments, but it needs to lay a solid foundation for the company in the future so that it is profitable in the future,” says Simons.