The global airline industry has faced financial distress in 2024, leading certain companies to file bankruptcy to reorganize or liquidate and in other cases just shutting down and ceasing operations.
Brazil's GOL airlines in January filed for Chapter 11 bankruptcy to reorganize in New York, asserting it was not generating enough cash to make payments on its $4.11 billion in debt from aircraft leases.
Related: Huge shipping company files Chapter 11 bankruptcy to liquidate
Canadian low-cost airline Lynx Air in February obtained an initial order for creditor protection from the Court of King's Bench of Alberta under the Companies' Creditors Arrangement Act with plans to shut down all operations and wind down its business.
Several regional airlines in 2024 have either filed bankruptcy or just shut down and ceased operations, including Air Malta, FlyArna from Armenia, LIAT from Antigua and Barbuda, Air Vanuatu and United Caribbean Airlines from Curaçao.
In addition to airlines, airplane manufacturers have fallen into distress, as well, including Universal Hydrogen, which was developing hydrogen-powered jets to sell to the airline industry, but ran out of cash and needed to shut down in June.
The Hawthorne, Calif.,-based manufacturer had burned through $100 million in venture capital that it raised from investors and its efforts to raise new financing failed. A proposed plan to merge with Florida-based airline Silver Airways also fell through. The company, however, did not filed bankruptcy.
Another aircraft manufacturer is facing bankruptcy, but from a different type of financial distress – losing an arbitration judgment.
Related: Popular gym chain files Chapter 11 bankruptcy, closing locations
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Boeing partner Paramount Group files Chapter 11
Aerospace and defense contractor Paramount Group Ltd., a non-operating entity in the Abu Dhabi Global Market, on Aug. 15 filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware after a disputed arbitration decision was issued against the debtor earlier in August.
Three other Paramount entities also filed Chapter 11, including Paramount Intellectual Property Holdings Inc., Paramount Logistics Corporation Ltd. and Fivemiletown holdings Ltd.
The much larger Paramount Group collection of global entities, which was founded in South Africa in 1994, did not file Chapter 11.
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The arbitration had been initiated by an unnamed Middle Eastern company in 2022, the company said in a statement as reported by DefenceWeb.
The debtor's Chapter 11 petition lists an unsecured "contingent, unliquidated and disputed" litigation claim with no specific amount stated that is owed to creditor Abu Dhabi Autonomous Systems Investments Co. It does not, however, name the creditor as the arbitration party.
Paramount Group Ltd. ADGM believes the arbitration decision was incorrect, but the decision cannot be appealed under the arbitration rules, according to the statement. The debtor was also not allowed to pursue counterclaims against the unnamed Middle Eastern company during arbitration.
Now that Paramount Group Ltd. ADGM has filed Chapter 11, it can pursue its claims in U.S. federal courts, which it says far exceed the arbitration award. The Chapter 11 filing also triggers an automatic stay of all legal actions against the debtor while the Chapter 11 case proceeds.
The debtor listed $500 million to $1 billion in assets and $100 million to $500 million in debt, including $2.3 million owed to a Greek affiliate Paramount Industries Innovator Systems Greece.
Paramount Group Ltd. ADGM said that the Chapter 11 filing will not in any way affect the company's operations around the world.
The larger Paramount Group company, which didn't file Chapter 11, in July 2014 signed a memorandum of collaboration with the Boeing Company's (BA) Defense, Space and Security affiliate to jointly develop defense and security opportunities in key international markets.
The agreement allowed the companies to apply their complementary strengths to provide aircraft and land systems solutions for major markets that face security challenges, such as border security, heavy airlift of products and personnel across vast distances, coastal piracy, and anti-poaching, and disaster and humanitarian relief as part of future coalition efforts, according to a Boeing statement on the partnership at the time.
Various platforms explored included Boeing rotorcraft, unmanned aerial systems and related support services, and Paramount's land vehicles and aerospace vehicles systems capabilities deployed around the world.
The companies expanded upon that agreement in March 2016 on an advanced mission system for a variant of the advanced, high performance, reconnaissance, light aircraft, according to a statement at the time. The statements did not say when the two agreements would terminate.
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