Air Belgium engages in judicial reorganisation: creditors to vote on proposed plan

Air Belgium is currently undergoing a Judicial Reorganisation Procedure (JRP) aimed at restructuring its debts and obligations to avoid insolvency. The airline has submitted a reorganisation plan, which is now pending approval by its creditors, including passengers affected by flight cancellations.

The reorganisation plan, finalised on August 14, 2024, was developed with the assistance of a court-appointed reorganisation practitioner, Bernard Vanham, who operates with full independence. This plan outlines the measures necessary to stabilise Air Belgium’s financial situation and includes specific repayment terms for its creditors. Creditors are now being asked to vote on the plan, with the outcome of the vote scheduled to be announced after a hearing on September 4, 2024.

Key details of the reorganisation plan

The reorganisation plan categorises creditors into various classes, each with specific repayment terms. Individual passengers awaiting refunds due to flight cancellations fall under “Class H: individual passenger trade creditors.” Notably, this class is set to receive full reimbursement of ticket prices by the end of April 2025, with no reductions applied to their claims.

Other creditor classes face varying degrees of reductions. For instance, ordinary banks are subject to a 40% reduction, while lenders and shareholders see reductions as high as 95%. The plan’s structure appears designed to ensure that essential stakeholders, particularly passengers, are made whole, while other creditors bear a more significant burden in the restructuring process.

The voting process

Creditors have been given the opportunity to review the reorganisation plan ahead of the September 4th hearing. They are invited to vote on whether to accept the proposed terms. The vote can be cast in person or by proxy, with many being encouraged to authorise the reorganisation practitioner, Bernard Vanham, to vote on their behalf due to limited courtroom capacity.

Creditors must submit their proxy voting forms by August 30, 2024. It’s important to note that while voting is not mandatory, only the votes of those who participate will be counted in determining the outcome. The plan cannot be amended at this stage, so creditors are faced with a simple choice: to accept or reject the proposed terms.

Potential outcomes

Should the reorganisation plan receive approval from the creditors and be ratified by the court, Air Belgium will begin implementing the plan and start repaying claims from September 19, 2024, according to the outlined terms. However, if the plan is rejected, Air Belgium may not be able to proceed with the reorganisation, potentially leading to more severe financial consequences for the company and its creditors.

Conclusion

Air Belgium’s reorganisation plan is a crucial step in the airline’s efforts to overcome its current financial challenges. The outcome of the upcoming vote will determine whether the company can move forward with its proposed strategy to repay its debts and continue operations. Creditors are urged to carefully consider the plan and participate in the voting process, as their collective decision will shape the future of Air Belgium.