Sojitz files objection to Varig's motion to make preliminary injunction permanent

By Jennifer Lanning Drey

Eugene, Ore., July 18 - Sojitz Corp. of Japan objected to Varig SA's foreign representative's motion to convert the company's preliminary injunction into a permanent injunction, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

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."

Sojitz also requested a court order directing Varig to return aircraft equipment currently located at the Varig Engineering and Maintenance facility in Rio de Janeiro, Brazil, according to the filing.

Sojitz said in the filing that it delivered a letter to Varig demanding that the aircraft equipment be turned over to Sojitz, but Varig has not complied.

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.

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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