CargoLogicAir Ltd - Case Update

David Buchler and Joanne Milner of Buchler Phillips have provided a positive update on their administration of CargoLogicAir, having resolved a number of significant and unprecedented issues in the administration of the sanction-ridden cargo airline.

We last wrote about CargoLogicAir in June, when we described how the joint administrators were encountering a plethora of issues in securing the company’s bank accounts and other assets due to the sanctions against the company. At that time, the joint administrators had been working to open a bank account and NatWest had just confirmed that it would allow the company’s funds to be held in a separate Insolvency Service account.

NatWest opened the bank account in May 2023 but the first payments from the account were not made until the end of October due to several months of due diligence, discussions between the joint administrators, legal counsel DLA, the Insolvency Service, NatWest and Citibank (the company’s previous bankers), and multiple requests (which the joint administrators have complied with) to apply for amendments to the administration licence granted by OFSI.

The terms of the account require the joint administrators to obtain approval from NatWest for every transaction to be processed and to run each transaction via the Insolvency Service, which in turn must arrange a 30-minute window with NatWest where the temporary “freeze” on the relevant account will be released and transactions can be processed.

The lack of a bank account and inability to access funds had made it impossible for the joint administrators to pay service providers such as Trax, an aircraft maintenance stock system used by the company, meaning the joint administrators could not proceed to sell the company’s stock, including B747 aircraft parts. Access has now been granted, and Lambert Smith Hampton will work to realise the stock, although total realisations are expected to be less than the £1,200,000 initially estimated.

While Microsoft restored access to some of the company’s records in October, the joint administrators are still having trouble accessing some electronic records stored on particular software. This lack of access is “severely hampering” the progress of the administration, and the joint administrators are in the process of instructing DLA to take legal action against Microsoft to recover the records.

The Joint Administrators currently anticipate that a distribution will be available to the unsecured creditors. Their latest progress report can be found HERE.