On June 14 and 15, 2022, Togut, Segal & Segal LLP assisted JPA No. 111 Co., Ltd. and JPA No. 49 Co., Ltd., two Japanese special purpose vehicles, in successfully closing the sales of two Airbus A350 Aircraft and certain related assets to affiliates of SVP Global. The sale closings follow a March 18, 2022 bench ruling from Judge David S. Jones of the U.S. Bankruptcy Court for the Southern District of New York approving the proposed sale over the objections of the debtors’ prepetition security agent, who was also the majority senior lender; the favorable bench ruling led to a global settlement and fully consensual sale order that paved the way for closing. The sales provide for cash proceeds to the debtors’ estates, which will be used to fund a chapter 11 plan of liquidation, and satisfy and release all of the debtors’ prepetition secured lenders’ claims.
As discussed in a prior press release, the Togut Firm assisted the debtors with filing their chapter 11 cases on December 17, 2021 with the primary purpose of pursuing a sale process for substantially all of the debtors’ assets pursuant to section 363 of the Bankruptcy Code. Following the filing of the chapter 11 cases, the security agent challenged the eligibility of the debtors—Japanese entities with their primary assets in Vietnam—to maintain chapter 11 protection under the Bankruptcy Code, and alleged that the bankruptcy cases were filed in bad faith.
The Togut Firm successfully defeated the security agent’s motion to dismiss pursuant to a February 1, 2022 memorandum decision and order issued by Judge Jones. In that decision, Judge Jones held that the debtors were eligible to be debtors under chapter 11 of the Bankruptcy Code because of their interests in retainers on deposit with the Togut Firm and, notwithstanding certain factors identified by Second Circuit law regarding bad faith dismissals, the totality of the circumstances demonstrated the debtors’ good faith effort to use the bankruptcy process as a collective proceeding to achieve a superior outcome for all parties in interest. The decision resolved a key gating issue for the chapter 11 cases and allowed the debtors to move forward with seeking approval of their proposed auction and marketing process. The decision can be accessed here.
The chapter 11 cases are captioned In re JPA No. 111 Co., Ltd. & JPA No. 48 Co., Ltd., Case No. 21-12075 (DSJ).