Tayside Aviation - Case Update

Geoff Jacobs and Blair Nimmo at Interpath Advisory have provided an update on their administration of collapsed Dundee flight school Tayside Aviation.

The company entered administration on 20 April after incurring significant liabilities for prepaid flying courses which affected its ability to generate income from new sales. The company also faced delays in onboarding senior personnel which adversely impacted business performance.

Upon the appointment of joint administrators, 20 of the company’s 23 employees were made redundant, with three kept on to assist the joint administrators. The administration attracted widespread publicity and the administrators received several enquiries regarding the company’s assets and some regarding the business.

The administrators initially focused on parties interested in buying all of the company’s business and assets. GMG Asset Valuation were instructed to assist with valuation and strategy. Unfortunately, no credible offers were received to purchase the business and its assets by the 10 May deadline, and the joint administrators and GMG determined that the appropriate strategy to deal with the company’s aircraft was a piecemeal sale. They have now realised circa £500k from the sale of 10 aircraft and certain other assets. GMG have also just concluded the sale of two scrap aircraft and are in final negotiations with an interested party for the two remaining non-operational aircraft.

Secured creditor Royal Bank of Scotland has been repaid in full.

There were two other parties with registered charges against the company – former owner Anthony Banks, who registered his charge on 6 April (two weeks before administrators were appointed), and ARB (Scotland) Investments, which registered its charge on 18 April (two days before administrators were appointed). Due to the proximity of the registration dates of the charges and the insolvency of the company, the joint administrators sought legal advice on the validity of these charges. The legal advice obtained states that the charges applied to any funds advanced to the business after the date the charges were registered, with £110k owing to Mr Banks and nothing owing to ARB (Scotland) Investments.

Based on current estimates, the joint administrators anticipate that Mr Banks will receive a dividend under his floating charge. Ordinary preferential creditors are expected to be paid in full, while secondary preferential creditors are expected to receive a dividend. There may be a nominal dividend to unsecured creditors (which includes former students of the school).

The joint administrators’ progress report can be found HERE. They have been assisted by Brodies and Harper MacLeod.