Recovering and Remarketing a Portfolio of 737 Classics
Overview
A European lender had extended senior debt financing to Armavia against a security package of three Boeing 737-500 aircraft. In 2013, Armavia filed for bankruptcy and was subsequently liquidated, leaving the lender exposed to storage, preservation, parking, and insurance costs; and to recovering and remarketing the assets.
Challenge
While two of the three aircraft were parked in Yerevan and were relatively straight forward recovery cases, the third aircraft was parked at an airport in Poland with several claims against the asset from the local MRO and airport authority. Furthermore, there was little clarity over the physical condition of the aircraft and whether it was airworthy and adequately preserved.
ACC Aviation was engaged to manage the recovery and remarketing of these assets.
Our solution
- Technical – we deployed technical resources onsite to inspect the aircraft portfolio and collect, audit, and digitalise the records. Our team prepared the technical data room, and remarketing specifications.
- Valuation – based on the outcomes and findings of our inspection work, we advised the bank on the expected market value of the assets, the impact of various claims being held against the assets; and what impact this was likely to have on the predicted disposal proceeds and timeframe for sale.
- Remarketing – we actively remarketed the portfolio of assets to a range of operators and investors while negotiating settlement agreements with the various claimants, and managing the disposal transaction on behalf of the bank.
Client outcomes
ACC Aviation was successfully able to recover and remarket the aircraft portfolio. The value of the claims amounted to a material portion of the asset value and ACC Aviation was able to arrange discounted settlement agreements which increased the banks recoverable proceeds by several hundred thousand dollars.
All three units were eventually sold to an aircraft lessor and operated by an airline in the same jurisdiction as the previous operator, enabling the aircraft to remain on the same aircraft register, easing the transfer and the subsequent maintenance process.
Key achievements
- Technical due diligence and valuation of the aircraft portfolio
- Preparation of technical data room and remarketing specification
- Negotiation of claims against the assets, securing significant discounts
- Successful remarketing of the portfolio allowing the lender to fully exit the assets
Related posts
Advising a lender on drafting and negotiating an aircraft lease agreement
ACC Aviation provided valuable assistance to a West African financial institution by helping them protect their interests and reduce financial exposure during an aircraft remarketing process. Through careful tailoring of the aircraft lease agreement to account for the unique technical condition of the aircraft, ACC Aviation was able to help the lender structure a lease that effectively transferred significant risk and capital expenditure to the lessee.
Successful aircraft remarketing: maximising value from a distressed aircraft
ACC Aviation's asset management team recently assisted an HNWI in aircraft remarketing and disposing of a Boeing 737-300 aircraft. The aircraft, awarded to the client through a court-ordered settlement, belonged to the now-defunct Tayaran Jet.
Performing the Lease Returns of 1,381 Aircraft Components from a Big 3 Middle Eastern Carrier
ACC Aviation was engaged to perform the lease return process on our client’s behalf, performing the physical and technical inspection of the components, ensuring the components met lease return conditions, preparing and managing an open items list, and preparing the technical data room files in support of the remarketing process.
Launch of a multibillion dollar aircraft leasing fund
Our client set out to launch and manage a Shariah-compliant aircraft leasing fund with a targeted capitalisation of five billion dollars. The structure of the fund required a combination of equity and debt, with a targeted asset profile of new narrowbody and widebody aircraft.
