Airberlin Insolvency. How it affects your claim for delay compensation

On 15^th August 2017 Germany's second-largest airline airberlin (Air Berlin PLC & Co. Luftverkehrs KG) filed to commence insolvency proceedings before the District court (Amtsgericht Charlottenburg).

For several years now the company was struggling financially, despite the fact that it is one of Europe’s largest air service providers, operating approximately 140 aircrafts, and offering over 135 destinations worldwide. After Etihad Airways (airberlin’s biggest shareholder) withdrew their financial support, airberlin initiated insolvency proceedings.

airberlin still in operation

After commencement of the insolvency proceedings Germany’s Federal Government provided airberlin with a loan of over EUR 150 million in order for the company to continue its flight operations according to schedule until the end of November 2017.

As airberlin’s business is still viable, it is expected that the company can be restructured, so that it does not go bankrupt. If all creditors come to an agreement during the insolvency proceedings, the debts of the company can be also be “restructured” (i.e. it is possible that for the benefit of saving the airline, not all creditors will receive the full amount of their individual claims).

In this regard, the airline was allowed by the court to carry out the insolvency proceedings under its own management, in order to ensure all negotiations with potential buyers run smoothly and the company is able to sell (part of) its operations and/or restructure. At this time, there is no confirmation of any deal to be concluded.

Insolvency regulations: airberlin cannot pay compensation

Regardless of the strict compensation rules under Regulation (EC) No 261/2004, due to the effective insolvency regulations airberlin will not be able to pay its customers compensation for disturbed flights (cancellation, delay, denied boarding, downgrading).

Under German insolvency law, after commencement of the insolvency proceedings airberlin are simply not allowed to pay their debts, therefore all of the company’s debt (including a result of claims for compensation under Regulation (EC) No 261/2004) will not be paid by the company to its creditors, until the insolvency proceedings have been finalised.

Unfortunately, this means that your compensation cannot be claimed before airberlin or through the competent bodies determined in Regulation (EC) No 261/2004.

Can compensation be claimed before the court?

Any passenger that has been affected by a flight disturbance and has a right to receive compensation envisaged in Regulation (EC) No 261/2004 can file a claim to the creditor's list at the competent court (claiming compensation plus interest).

We should mention, that insolvency proceedings:

1. may take up to a few years, and even after they have been finalised, you may not be able to receive the whole amount of your compensation.
2. will involve additional fees, such as court fees, as well as representation (attorney) fees. Under German insolvency regulations – the debtor (airberlin) is not legally obliged to pay these fees[1].

How airberlin’s insolvency affects customer’s rights:

• You can still book a flight. At this time airberlin’s future is unknown, and it is unclear at this time whether the company will be allowed to pay compensation for disturbed flights. SkyRefund will keep you informed of any new information on the development of airberlin’s insolvency case.
• If you already have a ticket, you can use it – it is valid.
• airberlin will not reimburse tickets issued until 15^th August 2017.
• You may be able to rebook your tickets. If the tariff conditions, valid at the time of ticket issuance, have this option, you may rebook your ticket(s) with the airline.
• Any vouchers that you may have cannot be redeemed anymore. Vouchers cannot be used to book a flight, or for cash. Still, tickets that have already been booked against vouchers remain valid.

 

[1] According to http://www.debtcollectioningermany.com/bankruptcy.html

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