English Court appoints administrators to sanctioned company before license issued

Quick read

CargoLogicAir Limited (the Company) was the UK's only all-cargo main deck freight airline. Due to sanctions imposed on its Russian owner, the Company was unable to effectively trade and pay its debts as they fell due despite obtaining a 'Basic Needs Licence'. Its sole director applied to appoint administrators.

Issues

The court considered two key issues:

Should the administrators' appointment take effect immediately or only when a licence from the Office of Financial Sanctions Implementation (OFSI) was obtained?

Could the administrators make use of the Insolvency Services Account given their concern that commercial banks may refuse to provide banking services to the Company?

Decision

As the Company had a Basic Needs Licence pending the issue of the additional licence, administrators could be appointed immediately as it was likely that the requisite licence would be obtained.
The administrators could make use of the Insolvency Services Account. The Insolvency Service had approved this and it was a sensible and necessary step given the sanction affecting the Company's only operational bank account.

Key takeaway

The court ruled that it was preferable for the administrators to take immediate control of the Company. As independent experienced insolvency practitioners, they will take control of the Company and ensure an orderly wind-down that respects the sanctions regime.