CargoLogicAir - Case Update

The Court has dismissed an application by CargoLogicAir to strike out a counterclaim against it by WWTAI Airopco 1 Bermuda Ltd (the “lessor”), the owner of a Boeing 747-400 initially leased by the company in 2016.

Following the imposition of a flight ban on Russian-owned or controlled aircraft in February 2022, the lessor gave notice of default in March 2022 and purported to terminate the lease in April 2022. CargoLogicAir did not accept that those notices were justified and maintains that they were repudiatory breaches. In any event, the lease terminated in 2022, and the lessor took possession of the aircraft and has since sold it to a third party.

CargoLogicAir commenced a claim for return of the security deposit of USD 2 million and unquantified damages in May 2022. David Buchler and Joanne Milner of Buchler Phillips were appointed as joint administrators of the company on 16 November 2022, and the lessor served a defence and counterclaim in September 2023. Neither the administrators’ consent nor the court’s permission to make the counterclaim was obtained.

CargoLogicAir argued that the counterclaim should be struck out because permission under the Insolvency Act 1986 had not been given, while the lessor argued that it should be given permission to amend the counterclaim.

The Court ruled in favour of the lessor, granting retrospective permission to proceed with the counterclaim. The Court agreed with CargoLogicAir that the counterclaim was made in breach of the moratorium. However, the Court found that it should give permission to a properly formulated claim by the lessor that CargoLogicAir breached the lease, and that this resulted in early termination and loss of rental income. The counterclaim is at least partly defensive. Most, if not all, the issues raised by the counterclaim will have to be decided as part of the determination of CargoLogicAir’s own claim. As a result, the Court concluded that it would be in nobody’s interest (and not in the collective interests of CargoLogicAir’s creditors as a whole) to stand in the way of all these tightly connected issues being resolved together.

However, the Court did make its permission conditional upon the lessor: (a) not executing or enforcing any money judgment obtained in the counterclaim without the court’s permission or the administrators’ consent, and (b) providing its best current estimate of the market rent obtainable for the aircraft in the condition that it was when returned.

Max Kasriel of Fountain Court Chambers (instructed by PCB Byrne) represented CargoLogicAir. Steven Thompson KC of XXIV Old Buildings (instructed by Alius Law) represented the lessor. The decision can be found HERE.

The joint administrators have been assisted by LSH and DLA Piper.