Airlines were among the industries hardest hit by the global pandemic. Though conditions have improved somewhat since travel reopened, airlines continue to face challenges with staffing, increased costs for fuel, and other inflationary pressures. This issue of the JCR offers insights into how airlines are coping with the highly volatile environment in which they've operated over the past several years.
Kelly DiBlasi and Jason George of Weil, Gotshal & Manges LLP discuss how aviation companies, particularly non-U.S.-based companies, are increasingly turning to Chapter 11 to complete financial and operational restructuring, attracted by the U.S. Bankruptcy Code’s debtor-friendly eligibility requirements. Businesses that have a domicile, place of business, or property in the United States can avail themselves of Chapter 11 and benefit from, among other things, the automatic stay, the ability to reject contracts and leases, and access to debtor-in-possession financing to fund operations and the restructuring process. DiBlasi and George explain how several foreign airlines have taken advantage Chapter 11.
Luke Barefoot and David Schwartz of Cleary Gottlieb Steen & Hamilton LLP note that at least five multinational airlines have filed for Chapter 11 in the Southern District of New York since 2020. They discuss important factors potential debtors and their advisors should consider before opting for a Chapter 11 restructuring, including claims administration, prospects for recognition of the Chapter 11 case by foreign jurisdictions, and the potential cost and benefits of pursuing alternative dispute resolution processes.
David Simonds and Faraz Naqvi of Hogan Lovells and a former colleague, Jeremy Halford, write that cost-cutting efforts by surviving airlines since the pandemic have arguably left them in a stronger position to deal with the volatile operating environments. But in addition to remaining nimble and maintaining substantial liquidity, airlines will need cooperation from a host of stakeholders should they be faced with a need to restructure. The article looks at those stakeholders that could help or hinder such efforts.
In the wake of a recent wave of large Chapter 11 cases filed to address mass tort liabilities, George Howard, Katherine Grissel, and Kristie Duchesne discuss recent developments in case law on consensual and non-consensual third-party releases and proposed legislation in both houses of Congress that would impact the permissibility of such releases. Given the long-standing split among Bankruptcy Courts and Circuit Courts of Appeal on the scope and permissibility of third-party releases, these issues are likely to continue to generate costly and time-consuming litigation until the U.S. Supreme Court or Congress weighs in to resolve the conflicts among courts.
Eric Wise and Matthew Kelsey of Alston & Bird LLP discuss the growing convergence of legal regimes in countries outside the United States, particularly those in the UK and elsewhere in Europe, with Chapter 11 of the U.S. Bankruptcy Code and what that may mean for future international restructurings. Their article explains how attitudes toward bankruptcy in the United States evolved from a punitive mindset toward debtors to a bias toward reorganization and how early skepticism of Chapter 11 overseas gave way to the adoption of laws that favor reorganization over liquidation in some of those jurisdictions as well.
Also featured in this issue of the JCR are winners of TMA Global’s Turnaround & Transaction Awards and chapter and individual awards. The winners of these highly coveted awards will be honored during The 2022 TMA Annual in Boston. This year’s chapter awards recognized diversity, equity, and inclusion; international and North American chapter excellence; and most innovative program. Individual awards covered the categories of emerging leader, chapter impact, and individual excellence
