December 2, 2023

Brexit could bring windfall money to Air Berlin's creditors

Brexit could bring windfall money to Air Berlin’s creditors

Air Berlin planes in April 2014

The value of the previous airline’s bankruptcy is only 10.7 million euros.

(Photo: AP)

Cologne If you are going to print an Air Berlin insolvency schedule, you will need 3,000 pages of paper. 1.3 million passengers alone paid 850 million euros for trips they couldn’t take. The insolvency manager, Lucas Fluther, has so far deemed the €497.8 million claims against the airline justified, and billions could be added.

The problem: The so-called insolvency estate is Fluther at €10.7 million – 97.8 per cent less than the claims recognized. It doesn’t have to stay that way, however: A long-term legal outcome of Brexit is giving creditors of the airline, which collapsed in 2017, hope.

Since Air Berlin, which is registered in Great Britain, automatically becomes a company under civil law after the country leaves the European Union, its owner may have to be liable for any damage related to insolvency. This could be Clearstream, a subsidiary of Deutsche Boerse.

Therefore, the insolvency administrator Flöther filed a lawsuit with the Frankfurt Regional Court. The amount in dispute is €497.8 million, which is exactly the sum of the claims previously recognized in Air Berlin’s insolvency schedule. If Flöther prevails, the creditors will be 100 per cent satisfied. An ending no one dared to imagine.

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Fluther, one of the first ranks of insolvency administrators in Germany, is self-confident: “We have taken a good look at the legal situation. Post-Brexit, in our legal opinion, Clearstream has become the personally responsible partner of Air Berlin as a shareholder, and therefore should be responsible “.

The defendant rejects the allegations. “As a precautionary measure, Clearstream has already examined the consequences of Brexit on Air Berlin’s legal relations in detail while sharing external legal advice and deemed any allegations in this regard to be unfounded,” a spokeswoman says. The statement of claim filed since then has not changed that assessment.

“Clearstream will take all necessary and appropriate measures to defend itself against this lawsuit,” the spokeswoman said. The company has until the end of the year to present its arguments to the court.

The disputed amount can be doubled

The truth is: Although Air Berlin was a German airline, it was licensed as a public limited company (PLC) in Great Britain – that is, as a limited liability company. That changed after Brexit, and because of its administrative headquarters in Germany, the insolvent airline was transformed into a company under civil law. In the event of bankruptcy, the owners may be liable for damage.

In his lawsuit, the insolvency official cites a contract between Air Berlin and Clearstream from 2006. Thus, the subsidiary Deutsche Börse is registered in Great Britain as the owner of all common shares in Air Berlin, because it holds them in the custody of shareholders.

The critical factor for Clearstream’s liability is that “after the UK leaves the EU after the end of the transition period on December 31, 2020, the debtor in Germany will not be recognized as a limited liability company under German law,” says Flöther in the application that Handelsblatt can see.

The current claim amount of €497.8 million is perhaps just the beginning. This amount has been recognized by Flother, but the claims made by creditors are much higher: more than 8.5 billion euros. Not all registrations are justified, but in the end it may amount to a few billion euros. In any event, the current amount in dispute in the Clearstream lawsuit increases to the extent that other claims are recognized.

Fluther estimates that it will take at least five years to bankrupt Air Berlin. He wants to claim from Clearstream every extra cent it recognizes as a claim to creditors during this time.

more: How does an Air Berlin insolvency official want to benefit from claims against the union

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