CityJet Designated Activity Company v Companies Act 2014

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr Justice Michael Quinn
• Judgment Date: 21 October 2025
• Neutral Citation: [2025] IEHC 562
• Docket Number: [Record No. 2025/148 COS]

In the Matter of Cityjet Designated Activity Company

and

In the Matter of Part 10 of the Companies Act 2014

[2025] IEHC 562

[Record No. 2025/148 COS]

THE HIGH COURT

JUDGMENT of Mr Justice Michael Quinn delivered the 21 ^st day of October 2025 (Section 541)

Table of Contents

Introduction	2
The Company	4
Events leading to the petition	7
Prior examinerships	8
The Proposals	9
Effect on the shareholder and the investment	9
Effect on creditors	10
Appendix 4: Estimated outcome on a winding up	11
The statutory meetings	12
Provisions of the Act for consideration and confirmation of proposals	13
Section 539: Contents of the Proposals	13
Section 541: Confirmation of proposals	15
Section 543: Objection to confirmation by court of proposals	18
The investment process	19
The grounds of opposition	21
Unfair prejudice	22
Onus of proof	23
The evidence	23
The date of the estimated outcome	26
Appendix 4	27
Assets	28
Inventories	28
Trade accounts receivables	31
Liabilities	33
Estimated outcome	33
Unsecured Creditors	36
Unfair prejudice and valuation	37
Conclusion on the inventory	40
Estimated outcome for unsecured creditors	41
Reasonable prospect of survival	44
Evidence of a reasonable prospect	46
Cost savings	48
SAS	50
The Majority Investor	53
Historic Profits and Losses and Net Asset Position	55
Cash flow forecasts	57
Evidence of SARA	58
Evidence of the Company	58
The Examiners' evidence	60
Conclusion as regards reasonable prospect of survival	61
Employees	64
Conclusion	65

Introduction

1 . This judgment relates to an application by the Joint Examiners of CityJet DAC (“the Company”) for confirmation of proposals (“the Proposals”) for a scheme of arrangement between the Company and its member and creditors.

2 . The Joint Examiners are Kieran Wallace and Andrew O'Leary, of Interpath (Ireland) Limited. They were appointed on an interim basis by order of this court on 8 May 2025. Their appointment was confirmed on 26 May 2025.

3 . The petition was presented in the names of the directors and in the name of the Company, the directors having resolved to petition. The sole shareholder is Strategic Alliance of Regional Airlines Limited (“SARA”). It was not a party to the petition. It was represented at the hearing of the petition and did not oppose the appointment of the Examiners. It opposes their application to confirm the Proposals.

4 . The Examiners have formulated the Proposals, held meetings of the sole member and of the creditors of the Company as required by Part 10 of the Companies Act 2014 (“the Act”), and reported to this court on the outcome of those meetings, with the recommendation that the Proposals be confirmed in accordance with s. 541 of the Act.

5 . The Examiners say that the Proposals comply with s. 539 of the Act, and have been approved by the required majorities of creditors in accordance with s. 540. They say that the outcome for impaired creditors under the Proposals is better than the alternative financial outcome that would arise in the event of a liquidation, and that implementation of the Proposals will facilitate the survival of the Company and the whole of its undertaking as a going concern.

6 . The application is supported by the following parties:

• (1) The largest unsecured creditor Export Development Canada (“EDC”), which is an assignee of claims against the Company by a lessor of aircraft and parts CJF Aviation Designated Activity Company. EDC claims to be owed an unsecured debt of €10,991,845.93, and has a contingent unsecured claim of €22,843,123.84.

• (2) Scandinavian Airlines System (SAS). SAS is the Company's principal customer, and under the proposed restructuring will become the sole customer of the Company. It states that if the Company enters liquidation, it will suffer harm and loss which it estimates at €30 million comprising liability for prepayments, damages, and replacement capacity costs.

• (3) CCS Maintenance APS, which is a creditor for the sum of €44,472.05.

• (4) The Company, acting by its directors.

7 . The Revenue Commissioners have a super preferential claim for €41,708 and a preferential claim for €167,316.71. They are noted also as a contingent preferential creditor for an amount not determined. They are not impaired by the Proposals. The Revenue Commissioners were neutral on the application.

8 . The application is opposed by the sole shareholder, SARA, and by four creditors which are associated with it:

• (1) CF Miga Investment Holdings DAC, which is a 20% shareholder in SARA, is owed a debt of €4,276,211.38, as an unsecured creditor. It is also owed a sum of €437,180.03 as a secured creditor, but it is not intended that the secured debt will be impaired by the Proposals.

• (2) SLB Holdco. SL, an affiliate of SARA, is owed €1,407,649.25.

• (3) Air Resources Agency Services Limited, a subsidiary of SARA is owed €30,701.

• (4) SARA itself is owed €167,400.54.

9 . CF Miga Investment Holdings DAC had also invested a sum of €3,469,240.86 by way of equity investment in the Company.

10 . I shall use the term SARA to refer to SARA and the creditors affiliated to it.

The Company

11 . The Company was incorporated on 28 September 1992. In January 1994 it commenced its business of passenger flights between Dublin and London under a franchise agreement with Virgin Atlantic Airways. In the years which followed the Company evolved both in terms of its core business activity and its ownership structures.

12 . In its current form the Company specialises in “wet leasing” of aircraft. Wet leasing is the supply to customers, being other airlines, of aircraft, crew, maintenance services and insurance (“ACMI”) to operate on the customer's behalf for agreed prices per “block hour”. The Company contracts with its customers for a minimum guaranteed number of block hours per route, and typically the contract with each customer is for a period of 3 to 4 years. The customer airlines remain responsible for selling seats and covering fuel costs, navigation fees and handling charges.

13 . In 2018 the Company and Air Nostrum LAM SA, a Spanish regional airline, announced their intention to merge. The intended merger had been approved by the EU Commission but was delayed by the onset of the Covid 19 pandemic and other challenges.

14 . In April 2023 the merger transaction was revived and by a scheme of amalgamation which became effective on 26 September 2023 the Company became a subsidiary of SARA. The shareholders in SARA were the former CityJet Holdings (now CF Miga) as to 20% and Air Investment Valencia SL, as to 80%. Air Investment Valencia is beneficially owned by the original Air Nostrum shareholders, Mr. Bertonev Martinez and Mr. Miguel Angel Facon Martin.

15 . Other subsidiaries of SARA are operating airlines, wet lease providers, principally operating from Spain, and a number of companies which are service providers to all of the operating companies in the group, including the Company. These include Air Nostrum Global Services SLU, Air Nostrum Engineering and Maintenance Operations, and Air Resources Agency Services Limited, which are creditors of the Company.

16 . The Company has been availing of essential maintenance and other services provided by other members of the SARA group. In particular Air Nostrum Engineering and Maintenance Operations SLU (ANEM) provides maintenance services for the Company's aircraft. At the time of the appointment of the Examiners the Company was paying approximately €2.3 million per month to ANEM for the provision of these services.

17 . Services provided by Air Nostrum Global Services SLU ANGS comprised back-office support services such as human resources assistance and finance services.

18 . On coming into effect of the merger the SARA Group became Europe's largest independently owned regional jet wet lease provider and it was envisaged that significant cost savings and other synergies could be achieved by the shared support services.

19 . At the time of the petition for the appointment of the Examiners the Company had wet leasing contracts with two customers namely SAS and Deutsche Lufthansa AG (“Lufthansa”). Its contract with SAS was for the provision of 12 aircraft in service and three back up aircraft. With Lufthansa the contract was for the provision of five aircraft and one back up aircraft. Lufthansa have terminated that contract and the termination is scheduled to take effect on 31 October 2025.

20 . The fleet of aircraft with which the Company fulfilled these requirements and the lessors were the following:

Aircraft model	No.	Lessor/Financier
Bombardier CRJ 900	8	CJF Aviation DAC (financed by EDC)
Bombardier CRJ 900	2	Commuter Aircraft Leasing 2017 VIII Limited
Bombardier CRJ 900	2	EIC Aircraft Leasing Limited
Bombardier CRJ 900	5	Triangle Symber Leasing DAC (aircraft without engine)
Bombardier CRJ 1000	5	EIC Aircraft Leasing Limited

21 . The fleet will be downsized considerably following a decision by CJF/ EDC to sell its 8 aircraft to American Airlines, and to accept a surrender of them from the Company so that they will be delivered to American Airlines over a phased programme. To implement this the Company entered into a Lease Amendment Agreement in March 2025 which provides for a programme of surrendering aircraft to EDC, to enable EDC to fulfil its contractual obligations to American Airlines. Under the Lease Amendments the Company is responsible for the safe delivery of the aircraft to American Airlines. This redelivery programme is underway and significant savings in penalties and other costs will be achieved if the redelivery programme can be...