CargoLogicAir not likely to be sold as a going concern
16 / 06 / 2023
The joint administrator of CargoLogicAir has said the airline is unlikely to be sold as a going concern in its latest update on the company.
UK-based CargoLogicAir, which operated Boeing 747 freighters, was forced to halt services after sanctions relating to the Ukrainian conflict prevented it from flying to European Union and US destinations.
Its ultimate shareholder until recently, Volga-Dnepr entrepreneur Alexei Isaikin, had also been placed on a list of sanctioned individuals.
The airline then ran into problems operating its bank accounts on a timely basis despite having funds in its account which should have left the company solvent.
As a result, Buchler Phillips was appointed as administrator late last year.
In a progress update, the administrators said that there had been some interest in buying the carrier, but this now appeared unlikely.
“The joint administrators have been contacted by a Dutch cargo airline company in respect of obtaining the company’s air operator certificate (AOC). The AOC is not a saleable commodity but if the company is sold as a going concern, it will remain in the company’s name and will continue to be in force.
“It is unlikely that the company will be sold as a going concern but the interested party are keen on purchasing the company’s systems and documentation which will assist with their own AOC application.”
The administrator also outlined the difficulties faced trying to access company information. In order to sell Beoing 747 stock owned by the company, the administrators need access to information stored on the Trax aircraft maintenance system used by the airline.
However, CargoLogicAir has been blocked from accessing Trax due to unpaid invoices, which can’t be settled as there have been delays in the creation of a new bank account due to the sanctions.
The bank account is now in the process of being set up and once this is done will allow creditors and employees to be paid.
“Our legal advisors have contacted Trax who have confirmed that they will restore one month’s access upon payment of the outstanding invoices,” the update reads.
“Access for subsequent months will be made available as long as it is paid in advance. We will look to gain access once we have the bank account as the system is essential to enable our agents to sell the B747 stock.”
The administrators have also faced difficulty accessing other electronic records due to Microsoft blocking access to systems in July 2022 due to the sanctions.
It is hoped that the opening of the bank account and the ability to make payments will help resolve this issue, but if not, legal action will be considered.
Both CargoLogicAir and Volga-Dnepr UK were also locked out of premises near London Heathrow, but the administrator has been able to gain access to obtain company books and records.
In January, the administrators said they expect to realise sufficient funds to pay all creditors in full.
The administrator estimates £17.1m of total assets can be realised including £10.6m in cash, £3m in tax refunds, and £2.2m in stock relating to 747 spares – mostly held at East Midlands, Amsterdam and Frankfurt Hahn airports.
