Varig lessor asks court to declare company in contempt of order to stay current on aircraft payments

By Caroline Salls

Pittsburgh, April 24 - Varig SA aircraft lessor International Lease Finance Corp. asked the U.S. Bankruptcy Court for the Southern District of New York to find the company in contempt of a court order to keep current on all aircraft rent and maintenance payments, according to a Monday court filing.

According to the motion, on Sept. 20 the court ordered the company to stay current on the aircraft payments, but the company has failed to pay more than $2 million in rent on some of its aircraft, has failed to maintain the aircraft and has failed to return one aircraft after the lease ended and other aircraft after lease agreement defaults.

International Lease said it is entitled to have all of its aircraft returned to it.

Varig's preliminary injunction has been extended several times throughout its Section 304 bankruptcy case, amid objections from International Lease and other lessors who said the company has failed to pay rent and maintenance fees on the aircraft.

A hearing on Varig's motion to convert the preliminary injunction to a permanent one is scheduled for Thursday.

According to the motion to make the injunction permanent, the permanent injunction is necessary to give effect to the terms of the company's plan of reorganization filed in the Brazilian court.

Varig said the permanent injunction will prohibit enforcement of any pre-bankruptcy claims against the company and will permanently stay all proceedings in connection with the claims.

As previously reported, the injunction prohibits a lawsuit, action, enforcement process or proceeding, or claim or demand of reclamation for any leased aircraft and keeps creditors, employees and utility providers from terminating contracts for goods and services that would "threaten the contemplated restructuring."

Varig, a Rio de Janeiro, Brazil-based air carrier, filed for Section 304 bankruptcy on June 20, 2005. Its case number is 05-14400.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.