A judge has expressed "serious and significant concerns" about a survival scheme for Aer Arann and has adjourned to next week a hearing that would allow the company come out examinership.
The High court also heard that the Revenue Commissioners are objecting to the scheme on the grounds that it being treated unfairly because under the terms of the proposed scheme it would get a smaller dividend than other creditors.
Today Ms Justice Mary Finley Geoghegan said that she had "great concerns" over the scheme of arrangement that has been put together by Aer Arann’s examiner, Michael McAteer of Grant Thornton.
The Judge said she was raising what were "very serious issues" that needed to be addressed, because the court lacks the jurisdiction to approve the scheme unless it is satisfied that the airline has a reasonable prospect of survival as a going concern.
The scheme, which was secured the approval of nine of the 12 classes of creditors, will see some of Air Arann's creditors receive all the money they claim they are owed.
However others creditors, including Revenue, will receive no more than 22% of what they are owed. The airline's creditors are owed some €29.5m, with AIB its largest creditor at €5.2m.
The court heard that that as part of the survival plan €3.5m from a group comprising UK transport company Stobart and Galway businessman Pádraig Ó’Céidigh, who owns the airline, will be invested in the company.
Of that initial investment, €1.8m will be paid to creditors and €400,000 fees from the examinership process. The balance will go towards working capital.
However Ms Justice Finlay Geoghegan said that there were a number of uncertainties in the scheme. The Judge said that information was lacking on issues including the terms of how and when certain creditors are to be paid.
There were also issues about the new investment which required to be clarified. The Judge added she was further concerned that a statement of affairs listing all the airlines assets and liabilities, which was to be taken after creditors had voted in favour of the scheme, had not been included in the proposal put before the court.
The Judge said that "there must be certainty in every scheme of arrangement so that everybody understands what is contained in the scheme."
Jennifer O'Connell Bl for Revenue said their concern was that other creditors, such as Aer Lingus and the Dublin Airport authority who would normally rank behind them in the event of the airline being wound up were being paid all they were owed.
Revenue is owed €436,842 as a super preferential creditor, and €685,000 as a preferential creditor in PAYE and PRSI payments. Under the terms of the scheme Revenue would receive €181,000.
Rossa Fanning for Mr McAteer, who applied to the court to approve the scheme said that the examiner would address the issues raised by the Judge on Monday.
Counsel said that for commercial reasons his client was anxious to have the matter dealt with as soon as possible.
Counsel also told the court that Mr McAteer was aware of Revenue's concerns and had done his best to address them. Counsel added that if the Examiner was to put in place the modifications sought by Revenue it would effectively put the airline in liquidation.
The Judge agreed to adjourn the case to Monday to allow the examiner address both the issues raised by the court and by Revenue.