Court: Etihad does not have to pay damages for Air Berlin bankruptcy

Airbus A320 (V1Images.com/Shaun Grist).
Airbus A320 (V1Images.com/Shaun Grist).

Court: Etihad does not have to pay damages for Air Berlin bankruptcy

Airbus A320 (V1Images.com/Shaun Grist).
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The multi-million dollar claim for damages that Air Berlin's insolvency administrator Lucas Flöther had brought against major shareholder Etihad Airways is now finally off the table. The London Supreme Court ruled in favor of the golf carrier. The insolvency administrator does not want to pursue the proceedings any further.

A few months before the Air Berlin group went bankrupt, Etihad Airways issued a million-dollar declaration of patronage. In this agreement, Air Berlin was obliged to continue to be provided with financial resources. In the summer of 2017, however, this was withdrawn unilaterally and Air Berlin and numerous subsidiaries, including the Austrian Niki, subsequently had to file for insolvency.

Between Air Berlin, which formally had a plc, i.e. a British stock corporation, as the personally liable partner of the German limited partnership, and Etihad Airways, London was agreed as the place of jurisdiction in the event of disputes. In aviation, it is not uncommon for the UK to be chosen. Flöther was of the opinion that the major shareholder was liable due to the letter of patronage and had to fulfill it.

First, a lawsuit was filed in Berlin, with Etihad defending itself with a counterclaim that was intended to determine the place of jurisdiction. A court in London then declared it had international jurisdiction and opened the proceedings. The action in Germany was subsequently dropped as jurisdiction was established in the United Kingdom.

The Supreme Court has now ruled against Air Berlin's insolvency assets. The Berliner Morgenpost first reported on this. Flöther also explained to this medium that he will not pursue the compensation proceedings against Etihad Airways. In other words, this means that a line has been drawn under the cause and the Gulf carrier does not have to make any payments to Air Berlin's insolvency estate on the basis of the letter of patronage.

It was only recently announced that Flöther, in his capacity as liquidator, had offered to purchase any claims against Etihad Airways. Whether investors have found the the high-risk receivables acquired is not known. In any case, Lucas Flöther had high hopes at the beginning of the Air Berlin insolvency proceedings that a significant amount could be brought in for the creditors through the claim for damages against Etihad Airways. These have now obviously broken up. That too Procedures related to emission allowances didn't win the crowd.

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