Varig trustees object to preliminary injunction

By Caroline Salls

Pittsburgh, June 27 - Varig SA pass-through certificate trustees U.S. Bank NA, U.S. Bank Trust NA and Wells Fargo Bank, NA objected to the company's proposed preliminary injunction that would prohibit the trustees from taking action against aircraft leased by them to Varig, according to a Sunday filing with the U.S. Bankruptcy Court for the Southern District of New York.

"The leases of these aircraft, the value of which would collectively exceed $200 million, involve very substantial lease payments and are in default," the trustees said in the objection.

The trustees said Varig originally told them they would be free to exercise their rights, including repossession, of the aircraft if the company defaulted on the leases. However, Varig is now attempting to restrain the trustees' rights.

The trustees said Varig should be required to post "a substantial bond" or be held responsible for damages if the injunction is allowed.

A hearing on the preliminary injunction was scheduled for Monday.

Varig, a Rio de Janeiro, Brazil-based air carrier, filed for Section 304 bankruptcy on June 20. Its case number is 05-14400.

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