Varig aircraft lessor asks court to hold company officers in contempt of aircraft return orders

By Caroline Salls

Pittsburgh, June 19 - Varig SA aircraft lessor International Lease Finance Corp. asked the U.S. Bankruptcy Court for the Southern District of New York to hold the company's officers and directors in contempt of orders for payment of rent and maintenance fees and return of aircraft, according to a Friday court filing.

Specifically, ILFC wants the court to hold in contempt foreign representative Eduardo Zerwes, Varig and Rio Sul Linhas Aereas SA president Marcelo William Bottini, Varig director of contracts and purchasing Paulo Mario Rossi and Varig director of maintenance Antonio Flavio Costa.

According to the motion, despite the clear direction of the court in aircraft return orders, the company continues to operate the nine aircraft leased by ILFC.

"The daily damage to ILFC is not only the lost rent, but also the depreciation of the ILFC aircraft because of their continued use. This damage exceeds $3 million per month, or $100,000 per day," ILFC said in the motion.

ILFC said the company's "terminal financial condition" leaves it with little prospect of receiving payment on the aircraft.

The orders required the return of the aircraft if Varig defaults on payments ordered by the court.

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

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