Bankruptcy has not ended Regional Jet activities
Although Regional Jet, which operated under the Xfly brand, went bankrupt in February, it still has dozens of employees and a valid maintenance certificate.
In November last year, Nordic Aviation Group and its subsidiary Regional Jet filed for bankruptcy. The court declared Nordica bankrupt in January, followed by the bankruptcy ruling for Regional Jet, which operated under the Xfly brand, in February.
While one might assume a bankrupt company would cease operations entirely, business registry records show this is not the case for Regional Jet. Despite tax arrears of more than €244,000, the company posted €92,514 in revenue and employed 21 people in the third quarter of this year.
Regional Jet also still holds a valid aircraft maintenance organization certificate, which the Transport Administration last renewed in June, several months after the bankruptcy declaration.
Ivo Tolga, head of the airworthiness department at the Transport Administration, told ERR that bankruptcy does not automatically mean the end of a company's activities.
"During bankruptcy proceedings, a company may continue to operate in a limited capacity under the supervision of a bankruptcy trustee. In Regional Jet OÜ's case, ongoing activity is related to maintaining aircraft airworthiness," said Tolga.
Ensuring airworthiness requires valid certification, which must continue to meet aviation safety requirements even during bankruptcy, Tolga confirmed. For this reason, Regional Jet's maintenance certificate was updated as recently as June 26, months after the bankruptcy was announced.
According to Tolga, the Transport Administration has confirmed through supervision that Regional Jet maintains sufficient staffing and resources and remains compliant with regulations.
Regional Jet's bankruptcy trustee, sworn attorney Kristo Teder, said the company had two CRJ aircraft registered at the time financial difficulties began. One aircraft began being dismantled prior to the bankruptcy declaration and its parts have since been sold as bankruptcy assets. The second aircraft was put up for sale in its current condition — without engines.
The engines had been leased from Transpordi Varahaldus (TVH) and were returned to the lessor. Teder noted that in aviation, it is not unusual for an aircraft and its engines to have different owners.
"In many cases, engines and even landing gear are leased," Teder added. Still, he acknowledged that the lack of engines has had some impact on the sale process.
TVH began selling seven similar aircraft previously operated by Nordica and Regional Jet at the same time as the Regional Jet bankruptcy proceedings.
According to the business registry, Regional Jet paid nearly €168,000 in labor taxes during the third quarter of this year. Based on this, the average salary of the company's 21 employees would appear to be substantial. However, Teder clarified that these figures do not reflect only wages.
"Some employees whose involvement wasn't necessary for the aircraft sale process were laid off earlier and received legally mandated severance payments, which are included in the earlier tax figures," the trustee explained.
He said the continued employment of several dozen staff is tied to the need for an active Continuing Airworthiness Management Organization (CAMO) and a valid certificate in order to sell the aircraft. This, in turn, requires certain roles to be filled by qualified aviation engineers.
"Maintaining the organization has inevitably involved personnel costs. Without aviation engineers, the aircraft and its parts could not be sold and would be worth no more than scrap," Teder said.
The aircraft sale is scheduled to be finalized by the end of this year and Teder said inspections necessary to close the deal are currently underway. As a result, employees have been issued layoff notices.
A preliminary list of creditors has already been drawn up in the bankruptcy proceedings. The deadline to file objections is in mid-January.
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Editor: Marcus Turovski
