FitzWalter Capital Partners Sued for Alleged “Security Interests” over Aircraft; Plaintiffs “Seek Declaratory judgment”
February 14, 2022, Southern District of New York – Plaintiffs-Debtors JPA No. 111 Co., Ltd., and JPA No. 49 Co., Ltd commence an adversary proceeding against Defendant FitzWalter Capital Partners (Financial Trading) Limited, seeking “an order enforcing the automatic stay” and “declaring void all of the Defendant’s actions and suits against the Debtors and the non-debtor affiliates” under section 362 of the Bankruptcy Code. The complaint also seeks “recovery of money damages” for the Defendant’s pre and post-petition actions (in amounts to be determined at trial at a later date), to “surcharge the Defendant’s collateral” pursuant to section 506(c) of the Bankruptcy Code, “equitable subordination of the Defendant’s liens and claims” under section 510(c) of the Bankruptcy Code.
As alleged in the complaint, “the Debtors commenced these Chapter 11 Cases to prevent a secretive, “expedited, value-destroying, likely self-serving” enforcement sale that the Defendant implemented without providing any notice to the Debtors.” Specifically, Plaintiff asserts that the Debtors are sister-affiliated companies wholly owned by JP Lease that were each “formed to acquire and lease an Airbus A350-941 aircraft.”
The complaint contends that Defendant “breached its obligations” under governing law and contracts by allegedly initiating a “secretive and commercially unreasonable process” intended to quickly sell the lease assets at a discount to an affiliate without providing the Debtors and other interested parties notice required under New York law. The Debtors also request an order subordinating the Defendant’s alleged security interests and “allowed claims” pursuant to section 510(c) of the Bankruptcy Code and barring the Defendant from receiving any distributions from the proceeds of the adversary proceeding.
In re: JPA NO. 111 CO., LTD. and JPA NO. 49 CO., LTD., Case No.: 21-12075 (DSJ)