Judge orders liquidation of Russian state-owned lessors

Aircraft lessors had to terminate their Russia contracts due to sanctions imposed after the invasion of Ukraine. Photo: NurPhoto via Getty Images

Aodhan O'Faolain

The High Court has made orders winding up two Russian State-owned aircraft and shipping leasing firms GTLK Europe DAC, and GTLK Europe Captial DAC which are registered in Ireland.

Mr Justice Conor Dignam said that he was satisfied to appoint liquidators to the insolvent firms after he dismissed their application to be placed into examinership which he said was “fatally deficient”.

The companies are worth an estimated $4.5bn (€4bn), and their liquidations has been described as the biggest in the history of the State.

The firms, which have been hard hit by sanctions imposed on Russian entities following last year invasion of Ukraine, had launched a bid late last week to be given the protection of the courts from their creditors, several of whom had sought orders to have them wound up, and had submitted an independent expert’s report stating they could survive as going concerns following a successful examinership.

That proposition, however, was rejected by Mr Justice Dignam.

In his ruling he said the application lacked the “good faith” required to allow a court to appoint an examiner to a company.

The judge noted that the companies had claimed in the examinership proceedings that they were insolvent, which contrasted to the strong denials it had made in its opposition to the winding up proceedings.

This fundamental change of positions, which were contained in legal documents prepared within a relative short time of each other, needed to be fully explained to the court.

No explanation was given, he said.

The judge also said that the timing of the examinership application, which was brought one working day before the High Court was due to hear an application to wind up the companies, was questionable.

A purported attempt last weekend by the companies, which was done without the knowledge of their Irish lawyers, to have their dispute with the petitioning creditors go before an arbitrator in the UK was also questionable.

He said that the companies had attempted “to derail and delay” the hearing of petition to have the firms wound up, which commenced before the Irish courts in April.

The judge also said that the examinership was being dismissed on the grounds that the burden of proof required to show that the company has a reasonable prospect of survival following the examinership process had not been discharged.

In the circumstances he said he was dismissing the examinership application and making orders to wind up the companies.