Varig preliminary injunction extended to July 21

By Caroline Salls

Pittsburgh, July 5 - Varig SA's embargo on the seizure of its aircraft was extended until July 21 by the U.S. Bankruptcy Court for the Southern District of New York via an extension to the company's preliminary injunction, according to a Wednesday court filing.

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

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."

A hearing on converting the preliminary injunction to a permanent one is scheduled for July 21.

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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