Allco receivers propose plan to get sale of aircraft moving
Tuesday July 7, 2009
THE receivers of Allco Finance have put forward a novel plan to creditors of the failed asset management group aimed at circumventing its complex ownership structure which has held up the sale of its key aviation leasing business.Having been frustrated by the use of individual special purpose companies (SPCs) whose permission was previously required to sell the 68 aircraft involved, receivers Ferrier Hodgson have suggested that the proposed buyer acquire the SPCs as well as the planes.The Chinese aviation group HNA signed a deal in May to acquire the leases of the aircraft for an undisclosed sum, but it has yet to complete the transaction because the SPCs actually own the planes.The sale has been further complicated by the involvement of former Allco executives David Veal and John Kinghorn, who argue they have legal title over the aircraft through a small company, Allco Australian Holdings Ltd, which has sway over the decision-making process of the SPCs.Despite its name, AAHL is not a subsidiary of Allco Finance Group nor is it in administration. Both Mr Veal and Mr Kinghorn sought to take control of the aircraft by alerting potential bidders to their claim and the role of the SPCs in the auction - a move that has been challenged by Ferrier's.Nonetheless, the SPCs have so far refused to agree to sanction the handover of the management rights and therefore the sale itself.McGrathNicol, who were appointed administrators of Allco last November, have said the SPCs' blocking tactics could cause more delays or defeat the entire disposal process.Creditors were asked at a meeting last month to delay the winding up of two other small Allco companies that have the management rights over the aircraft while the receivers worked up a plan to spin them off and become, in effect, the full owners.The receivers have now proposed that HNA Group not only acquires the management rights but also the shares in the two aircraft companies and the preference shares of the special purpose vehicles. The handover would be undertaken through a deed of company arrangement that requires the approval of Allco's creditors at a meeting to be held in Sydney on Friday.The plan also includes the creation of a creditors' trust which would guarantee their rights to the proceeds from the sale along the same lines as if the companies had been wound up and put into liquidation. "The receivers have indicated that, in their view, by structuring the sale in this manner the aviation assets will be able to be sold without the involvement of the special purpose companies, thereby mitigating the risks that the sale will be adversely affected if (they) do not co-operate," McGrathNicol told creditors in a letter sent out at the weekend.