Vol 18 (2021) - Issue 3

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Re MAB Leasing Ltd: A Novel Approach to Class Composition

Synopsis
MAB Leasing Limited ('MABL') the main aircraft leasing entity of the Malaysia Airlines group, proposed a scheme of arrangement of certain of its aircraft lessors.
Malaysia Airlines, like many airlines, had been severely impacted by the COVID-19 pandemic and the resulting fall in passenger numbers. The scheme reduced the rents under certain English law governed aircraft operating leases. MABL proposed a single voting class, because each lessor was offered the same options to:
– reduce the lease rent to a market rent, which varied by type and age of the aircraft; or
– terminate the lease, take back their aircraft and receive a termination payment. The termination payment was calculated to be more than under a Malaysian liquidation, which the company said would be most likely without the scheme.
The UK High Court approved the scheme of arrangement and, most notably, the single class of scheme creditors despite the fact that the individual leased assets were unique and the effects of the scheme on those creditors were different.