The recent case in the High Court of Peregrine Aviation Bravo v Laudamotion [2023] EWHC 48 (Comm) sheds some light on the impact the pandemic had on relationships between lessors and airlines.
Continue Reading High Court strikes a cautionary note on lease termination: The recent case of Peregrine v Laudamotion
Distressed Assets: JOLs and JOLCOs
As a result of the COVID pandemic, with the resulting payment defaults amongst several airlines , the past few years have seen a surge in interest in distressed debt opportunities within the aviation sector. One particular area which has seen a lot of attention has been Japanese tax leasing – namely the Japanese operating lease (“JOL”) and Japanese operating lease with call option (“JOLCO”) products.
JOLs and JOLCOs have been staples of the aviation market for many years. Both are essentially operating leases with an investment of Japanese equity, typically provided by a Japanese corporation with tax capacity. This is usually twinned with limited recourse senior debt from a Japanese bank or a Japanese branch of an overseas bank, such that the credit of the underlying lessee is integral to the transaction as the revenue flowing from the lease would be used to pay the debt.