Contested aircraft parked at Luton, but quick resolution of ownership looks unlikely (735 words)

Published: 12/17/2001

The Moscow Region Arbitrage Court on the 13th of December has confirmed Moscow based Investment Company, Center Capital"s ownership of the contested “Maastricht" An-124-100 formerly owned by bankrupt Ajax Cargo Airlines. The court judgment follows previous judgments by the Russian courts giving Center Capital ownership of the An-124-100 accompanied by the aircraft being reregistered by the GSGA in Center Capital"s name. These actions being taken despite the aircraft having been acquired by Air Foyle Limited at auction in Maastricht in 2000, when airport authorities sold the aircraft to recoup unpaid airport charges following the collapse of the aircraft"s original owner. The basis of Center Capital"s claim on the aircraft comes from its acquisition of the debts of Ajax that collapsed in 1997, from Moscow based Imperial Bank. According to Center Capital, after acquiring Ajax"s liabilities they offered to pay the outstanding Maastricht Airport charges and recover the aircraft. An offer, that Center Capital say was turned down, with the aircraft subsequently being auctioned on the 4th December 2000 for $6m to Air Foyle after considerable delays caused by Ajax creditors in the Dutch court. The auction being considered by Center Capital to be both illegal and unfair given the failure of the Dutch auctioneers Meerman to accept an offer of $15m. The offer from an unnamed Russian party having been disallowed under the auction rules, according to Meerman, due to a breech of procedures. Center Capital therefore continue to assert its ownership and are unsurprisingly opposed by Air Foyle who regard the auction as legal under Dutch law and view themselves as the aircraft"s owners and offer “no recognition of Center Capital"s claim" according to Bruce Bird, Air Foyle HeavyLift"s Senior Vice President Operations. Center Capital however, continue to contest the UK cargo operators right to the aircraft and argue they have incurred considerable costs of over $10m invested in the project. Monies that they would like to have refunded by Air Foyle or the aircraft returned to them, according to Victor Zubko, Deputy General Director of Centre Capital, quoted in the local media. The aircraft is now in the UK, having been parked in Kiev until 28th of October 2001 after it was returned from the Netherlands in January 2000. Little work on its upgrade to 100M standard has been undertaken in the intervening period because of the uncertainty surrounding its ownership. An uncertainty that was aptly illustrated through the aircraft being attached by the Ukrainian courts after Center Capital contested the UK company"s ownership in Ukraine in August 2001. The decision was however, contested by Air Foyle and on the 29th October the attachment was lifted. According to reports the aircraft was flown from Kiev to Luton Airport in England, the day prior to the decision being officially released, under what Konstantin Lushakov General Director of Antonov Airlines describes as “temporary permission" from the Ukrainian aviation authorities. A permission contested by Centre Capital, who argue that the transfer was illegally on a number of points including the aircraft"s Russian registration and its export requiring the permission of the Russian MoD. Sources suggest however,that the aircraft"s change of registration to Center Capital in Russia from Ajax in the first place, was on the basis of it being airworthy, a condition it was obviously not in on the tarmac at Maastricht. Having had its appeal turned down on the 13th of December, Air Foyle is currently reviewing the situation regarding further action in the Russian courts. The failure to resolve the dispute in the aircraft‘s country of registration however, makes operation under ICAO regulations almost impossible, given that ownership disputes are required to settled in the country of registration. The physical presence of the aircraft in the UK however, means that it is unlikely that the airline will lose control of its asset given the auction is regarded as being legally constituted in both the Netherlands and the UK. Despite the efforts in the Dutch courts on the part of Center Capital/Imperial Bank prior to the auction to prevent the sale of the aircraft. The suspicion is that Center Capital"s main interest in the aircraft is the price that Air Foyle is prepared to make them go away. It would appear unlikely however, that the current state of affairs will lead to an amicable settlement in the short term between the two parties.

Article ID: 2959