Nordic Aviation Capital Designated Activity Company – Files Third Amended Plan of Reorganization and Disclosure Statement Ahead of March 10th Disclosure Statement Hearing as Plan Support Grows

March 9, 2022 – The Debtors filed a third Amended Plan of Reorganization and a related Disclosure Statement [Docket Nos. 513 and 515, respectively] with each attaching a redline showing changes to the version filed on March 3, 2022.

The Limerick, Ireland based Debtors own the world’s largest fleet of regional aircraft and filed for bankruptcy protection on December 19, 2021 with $5.9bn of funded debt ($5.4bn secured). At filing, the Debtors ($2.4bn net loss in 2020-2021 fiscal year) succinctly summed up the impact of the COVID pandemic on their operations: “customers are facing severe liquidity issues, and, simply put, NAC cannot collect cash that its customers do not have.”

As we have noted in respect of earlier turns of the Plan documents, the size, complexity and number of creditor groups involved in these cases is extraordinary; resulting in a Plan that (at least until this turn of the documents) included 56 classes with the vast majority of those classes involving secured claims collateralized by distinct (but often overlapping) assets/security. With the ECA Lenders and NYL Lenders (each as defined and described below) now signing onto an amended restructuring support agreement, the Debtors are now down to 51 classes.

Two major developments are highlighted in amendments to the latest iteration of the Disclosure Statement, namely the agreement of term sheets “governing the treatment of Claims against the Debtors under each of the ECA Financing Arrangements and NYL Financing Arrangements (respectively, the ‘ECA Facilities Term Sheet’ and the ‘NYL Term Sheet’), and includes the ECA Lenders and the NYL Lenders as Consenting Creditors under the Restructuring Support Agreement.”

These agreements (see the Debtors' revised Plan summary and the revised summary of classes/claims below) necessitate an updating of the Debtors’ restructuring support agreement, with a third amended and restated RSA now being circulated to already consenting stakeholders for sign-off. With the ECA Lenders and NYL Lenders, the Debtors state that Plan support now stands at “approximately 95 percent of outstanding claims against NAC DAC.”

From the revised Disclosure Statement: “Months of hard-fought negotiations have, as of the date hereof, culminated in agreements in principle between the Debtors and each of the ECA Lenders and NYL Lenders. The terms and conditions of those consensual agreements have been memorialized in a proposed third amended and restated version of the Restructuring Support Agreement (the “Third A&R RSA”), which the Debtors have transmitted to those Consenting Stakeholders whose consent is required to effectuate such an amendment. The proposed Third A&R RSA will (a) effectuate modifications to certain Restructuring Term Sheets, (b) incorporate additional bespoke Restructuring Term Sheets as exhibits, specifically term sheets governing the treatment of Claims against the Debtors under each of the ECA Financing Arrangements and NYL Financing Arrangements (respectively, the “ECA Facilities Term Sheet” and the “NYL Term Sheet”), and includes the ECA Lenders and the NYL Lenders as Consenting Creditors under the Restructuring Support Agreement. Execution of the Third A&R RSA, which the Debtors anticipate to occur prior to the date of the hearing scheduled for approval of the Disclosure Statement, will bring the total support for the Restructuring Support Agreement, as more fully described below to approximately 95 percent of outstanding claims against NAC DAC.”

Plan Overview

The Third Amended Disclosure Statement [Docket No. 515] notes (changes in blue bold): “As of the Petition Date, the Debtors are liable for approximately $5.9 billion in aggregate funded-debt obligations on account of various different financing, lease and security structures that enable the Group to maximize tax efficiencies and business flexibility. The primary financing structures the substantial majority of which are secured structures include: (a) direct facilities; (b) finance leases; (c) JOLCOs; and (d) swaps.

The Restructuring Transactions embodied by the Restructuring Support Agreement and Plan will deleverage the Group’s balance sheet by approximately $4.3 billion in debt pursuant to various equitization and sale transactions, provide the Reorganized Remaining Debtors with an infusion of approximately $537 million in new money in the form of an approximately $337 million equity rights offering and a $200 million new revolving credit facility, and, importantly, preserve customer relationships and the Group’s market leading position in the aircraft leasing industry.

To accommodate the Debtors’ diverse creditor constituencies, the Restructuring Support Agreement, the terms and conditions of which are embodied by the Plan, reflects a variety of differing restructuring and recapitalization transactions specific to each (or multiple) ad hoc group of creditors, as reflected by the various bespoke term sheets appended thereto. Specifically, the transactions contemplated under the Restructuring Support Agreement (including, for the avoidance of doubt, under the Third A&R RSA) include, among others:

• DIP Facility: the effectuation of a $170 million superpriority senior secured debtor-in-possession financing facility provided by certain of the Debtors’ existing prepetition lenders;
• Option A/D Equitization Restructuring Transaction: the equitization of approximately $[583 million] in secured note obligations and facility agreement obligations held by Holders of NAC 29 Funded Debt Claims, KfW Funded Debt Claims, and DB Nightjar Funded Debt Claims, in exchange for the issuance of New Ordinary Shares to such Holders, as well as the issuance of the New NAC 29 Debt (comprised of New NAC 29 Notes and/or New NAC 29 term Loan Facility Loans) to the aforementioned classes’ funded-debt claimants and Holders of SMBC Funded Debt Claims (together with the other restructuring transactions relating to the aforementioned Holders of Claims, collectively, the ‘Option A/D Equitization Restructuring Transaction’);
• Rights Offering: the implementation of an approximately $337 million equity rights offering, backstopped by the Backstop Commitment Parties, representing Holders of NAC 29 Funded Debt Claims, KfW Funded Debt Claims, and DB Nightjar Funded Debt Claims, to fund new aircraft investment and provide go-forward liquidity;
• Option C2 Restructuring Transaction: the amendment and restatement of that certain prepetition term loan credit agreement, by and among the Reorganized Investec NAC 27 Debtor and the Holders of Investec NAC 27 Funded Debt Claims (together with the other transactions relating to the Investec NAC 27 Debtor and the Holders of Investec NAC 27 Funded Debt Claims, collectively, the ‘Option C2 Restructuring Transaction’);
• Option E Transactions:

• JOLCO Restructuring Transactions: among other things, (a) the consensual rejection of the Leveraged Aircraft Leases of the JOLCO Debtors, (b) the remarketing and mortgage enforcement sale (outside of the chapter 11 process) of the related aircraft by the applicable security trustees to a third-party or to the corresponding Reorganized JOLCO Debtor,  (c) transfer, or as applicable, surrender and cancellation of the Debtors’ existing Interests in the JOLCO Debtors and issuance of new shares in the Reorganized JOLCO Debtors, in each case to either (i) an entity for the benefit of the Holders of the A Termination Claims, or (ii) the winning cash bidder for the aircraft (if they have elected to also purchase the shares in the Reorganized JOLCO Debtors), (d) the discharge of certain claims (i.e., the ‘A Termination Claims’) against the JOLCO Debtors and, if applicable, the issuance of the New Profit Participating Notes to the relevant JOLCO Lenders, in each case coupled with the extinguishment and release of other claims against the JOLCO Debtors (the ‘B Termination Claims’) (together with the other transactions relating to the JOLCO Debtors and the Holders of Claims against the JOLCO Debtors, collectively, the ‘JOLCO Restructuring Transactions’);
• NAC 8 Restructuring Transactions: among other things, (a) the amendment and restatement of that certain prepetition term loan credit agreement, entered into by and among NAC Aviation 8 Limited and the Holders of Investec NAC 8 Senior Funded Debt Claims, (b) the amendment and restatement of that certain prepetition term loan credit agreement, entered into by and among NAC Aviation 8 Limited and the Holders of Investec NAC 8 Junior Funded Debt Claims, (c) the issuance of the New Investec NAC 8 Equity to the Investec NAC 8 Buyer, and (d) entry into the Investec NAC 8 Exit Facility, (together with the other transactions relating to the Investec NAC 8 Debtors and the Holders of Investec NAC 8 Funded Debt Claims, collectively, the ‘NAC 8 Restructuring Transactions’);
• NAC 33/34 Transactions: the recapitalization of the NAC 33/34 Debtors through the New Money Investment Transaction, which will result in the (a) surrender and cancellation of the interests in NAC 33/34 and (b) issuance of the New NAC 33/34 Equity to a new holding company, 90 percent of which holding company will be indirectly owned by Azorra Aviation Holdings, LLC and/or its affiliates as the New Money Investors and 10 percent of which will be owned by the NAC 33/34 Lenders, among other things, which NAC 33/34 Transactions are more fully described herein and in the Plan; and
• EDC Exiting Restructuring Transactions: among other things, (a) the servicing and remarketing of twelve NAC CRJ Aircraft, and, to the extent the sale of such aircraft to a third party is not effectuated during the Chapter 11 Cases, the abandonment and transfer of such aircraft to a nominee of EDC under the Plan, and (b) the servicing of six additional EDC-financed CRJ aircraft (collectively, the ‘EDC Exiting Restructuring Transactions’);

• EDC Reinstating Restructuring Transactions: the amendment and restatement of the EDC Remaining Facilities entered into by and between certain of the EDC Debtors and the Holders of EDC Remaining Facilities Claims (collectively, the ‘EDC Reinstating Restructuring Transaction’); and
• NYL Restructuring Transactions: the assumption and assignment of the NYL Head Leases, subject to certain agreed modifications set forth in the NYL Term Sheet, together with the settlement of the outstanding claims arising under the NYL Financing Documents and certain other amounts: (a) the capitalization of all accrued scheduled and default interest under the NYL Note Purchase Agreement up to the Petition Date, and all scheduled (but not default) interest under the NYL Note Purchase Agreement during the period from the Petition Date until the Plan Effective Date, (b) the prepayment of the principal outstanding under the NYL Note Purchase Agreement in an amount of $30 million (which prepayment will be funded by an equivalent amount under the amended NYL Head Leases); and (c) payment of special rent equal to 1.0% of the initial outstanding amount under the amended NYL Head Leases (immediately prior to the $30 million prepayment) together with payment by Reorganized NAC DAC to the Reorganized NYL Debtors equal to the total amount of the NYL Debtors’ usage of cash collateral between the Petition Date and the Plan Effective Date (which shall constitute a ‘Servicer Advance’ as defined in the NYL Term Sheet), subject to item-specific caps set out in the NYL Term Sheet and excluding any such cash collateral amounts used to fund Chapter 11 Servicing Fees or Lease Reimbursement Costs (each as defined in the NYL Term Sheet) or any amounts payable under the NYL DIP Facility during the chapter 11 cases, to the extent that such payments were made under the cash collateral stipulations (collectively, the ‘NYL Restructuring Transactions’);
• ECA Restructuring Transactions

• ECA Reinstating Transaction: the assumption and assignment of the ECA Leveraged Aircraft Leases (Non-Garuda) subject to certain agreed modifications set forth in the ECA Facilities Term Sheet, including: (a) reinstatement of the outstanding principal plus all accrued, unpaid interest (including postpetition interest (excluding default interest) under any of the ECA Leveraged Aircraft Leases (Non-Garuda) for which the loan to value is less than one hundred per cent. (100%)) as principal under the amended ECA Leveraged Aircraft Leases (Non-Garuda), which will be guaranteed by Reorganized NAC DAC; (b) the creation of a Liquidity Reserve Account (as defined in the ECA Facilities Term Sheet) into which, initially, supplemental rent, maintenance reserves, end of lease compensation payments and security deposits will be paid, and thereafter all lease receivables will be paid, until a twelve-month look-forward balance has been met in order to meet upcoming lease payments (including maintenance costs and security deposits); and (c) the deletion of all financial covenants in the amended ECA Leveraged Aircraft Leases (Non-Garuda) (collectively, the ‘ECA Reinstating Transaction’); and
• ECA Exiting Transaction: among other things, the consensual rejection of the ECA Garuda Leases (as defined herein), through a motion and order to be filed with the Bankruptcy Court on a date to be mutually agreed following the Disclosure Statement Hearing, pursuant to which the Debtors will return the aircraft collateral subject to such leases to the ECA Lenders (collectively, the ‘ECA Exiting Transaction’);
• NYL DIP Facility: the NYL Debtors’ entry into a $15 million superpriority senior secured debtor-in-possession financing facility provided by the NYL Lenders; and

• Exit Facility: the entry into a $200 million super senior revolving credit facility, fully underwritten by Holders of NAC 29 Funded Debt Claims, KfW Funded Debt Claims, SMBC Funded Debt Claims, and DB Nightjar Funded Debt Claims pursuant to the Exit Facility Underwriting Agreement, or, at the Debtors’ election, and subject to certain conditions, an alternative exit facility.”

The following is an amended and updated summary of classes, claims, voting rights and expected recoveries, defined terms are as defined in the Plan and/or Disclosure Statement; see also the Liquidation Analysis filed at Docket No. 312):

Claims Against All Debtors (other than the NAC 33/34 Debtors and the Moelis/Weil/NRF Exiting Debtors)

• Class A1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $1.7mn and expected recovery is 100%
• Class A2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class A3 (“Section 510(b) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.

Intercompany Claims Against / Intercompany Interests in All Debtors (other than the NAC 33/34 Debtors and the Moelis/Weil/NRF Exiting Debtors)

• Class B1 (“Intercompany Claims Against All Debtors other than the NAC 33/34 Debtors and the Moelis/Weil/NRF Exiting Debtors”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan.
• Class B2 (“Intercompany Interests in All Debtors other than the NAC 33/34 Debtors and the Moelis/Weil/NRF Exiting Debtors”) unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan.

Claims Against / Interests in NAC DAC

• Class C1 (“NAC DAC Unsecured Funded Debt Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $6,182.6mn and expected recovery is 0.03%. Each Holder shall receive, at the option of such Holder (unless otherwise stated in the Plan), its Pro Rata share of the NAC DAC Unsecured Funded Debt Claims Recovery Pool, either: (i) in Cash; or (ii) as a Pro Rata share of the NAC DAC Unsecured Funded Debt Claims New Ordinary Shares Allocation; provided, that, notwithstanding the foregoing option, (x) Option A/D Holders shall receive such Pro Rata share of the NAC DAC Unsecured Funded Debt Claims Recovery Pool as a Pro Rata share of the NAC DAC Unsecured Funded Debt Claims New Ordinary Shares Allocation, and for the purposes of the Plan shall be deemed to have elected to receive such treatment and (y) the Moelis/Weil/NRF Consenting Exiting Creditors and Holders of NAC 33/34 Loan Claims Holders shall receive such Pro Rata share of the NAC DAC Unsecured Funded Debt Claims Recovery Pool in cash; provided, further, that, to the extent the NAC DAC Unsecured Funded Debt Claims New Ordinary Shares Allocation equals 5.00 percent of the New Ordinary Shares (prior to consummation of the Rights Offering (including issuance of the Backstop Shares), payment of the Rights Offering Premiums, and implementation of the Management Incentive Plan), any remaining balance of the NAC DAC Unsecured Funded Debt Claims Recovery Pool that is payable to Holders electing the NAC DAC Unsecured Funded Debt Claims New Ordinary Shares Allocation shall be paid in Cash to such Holders electing the NAC DAC Unsecured Funded Debt Claims New Ordinary Shares Allocation on a pro rata basis.
• Class C2 (“General Unsecured Claims Against NAC DAC”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class C3 (“Interests in NAC DAC”) is impaired, deemed to reject and not entitled to vote on the Plan.

Claims Against NAC 29 Debtors

• Class D1 (“NAC 29 Funded Debt Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $3,622.4mn and expected recovery is 70%. Each Holder shall receive: (i) its Pro Rata share of the Initial New NAC 29 Debt; provided that each Holder of an Allowed NAC 29 Funded Debt Claim shall have the option, in its sole discretion, to elect (such election to be made on the duly submitted ballot setting forth such Holder’s vote on the Plan) to receive either New NAC 29 Notes or New NAC 29 Term Loan Facility Loans (but not both). If a Holder of an Allowed NAC 29 Funded Debt Claim on account of the USPP Notes does not make such an election, such Holder shall receive its Pro Rata share of the Initial New NAC 29 Debt in the form of New NAC 29 Notes. If a Holder of an Allowed NAC 29 Funded Debt Claim under a NAC 29 Facilities Agreement does not make such an election, such Holder shall receive its Pro Rata share of the Initial New NAC 29 Debt in the form of New NAC 29 Term Loan Facility Loans; (ii) its Pro Rata share of the NAC 29 New Ordinary Shares Allocation, subject to dilution by the Rights Offering Shares (including, for the avoidance of doubt, the Backstop Shares), the Rights Offering Premiums, and the Management Incentive Plan; (iii) its Pro Rata share of the subscription rights to the NAC 29 Rights Offering Allocation; (iv) its NAC 29 Exit Facility Participation Right; (v) with respect to Holders of NAC 29 Funded Debt Claims that are not Rights Offering Participants or are Rights Offering Participants that have subscribed for less than their Pro Rata share of the NAC 29 Rights Offering Allocation, its Pro Rata share (taking into account any shares already subscribed for by such Holders that are Rights Offering Participants) of the Residual Shares (if any), up to the level of such Holder’s Allocable Restricted Cash (provided that, for the avoidance of doubt, any such distributions of Residual Shares shall reduce the Allocable Restricted Cash to be paid to such Holder in an amount equal to the subscription price payable in respect of such Residual Shares (which subscription price shall be paid by NAC 29 and/or NAC 36 to the Reorganized TopCo on behalf of such Holder)); and (vi) its Allocable Restricted Cash; provided that the pro rata share of Allocable Restricted Cash in respect of a Holder of an Allowed NAC 29 Funded Debt Claim that is a Rights Offering Commitment Party shall be applied in accordance with the Rights Offering Commitment Agreement; provided, further that, the pro rata share of Allocable Restricted Cash distributed to all Holders of NAC 29 Funded Debt Claims shall be decreased by (a) any Rights Offering Entitlements that have been subscribed for by the relevant Holder in respect of such NAC 29 Funded Debt Claims and (b) the subscription price (calculated at the Plan Equity Value) of any Residual Shares that are distributed to such Holders in the event of an Equity Issuance Shortfall; provided, further that the distribution of Allocable Restricted Cash (if any) shall reduce the amount of each applicable Holder’s NAC 29 Funded Debt Claims on a dollar-for-dollar basis. For the avoidance of doubt, all such Pro Rata amounts shall be allocated before taking into account any debt pay down using Restricted Cash. 
• Class D2 (“General Unsecured Claims Against the NAC 29 Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $41,697.34  and expected recovery is 100%.

Claims Against KfW Debtors

• Class E1 (“KfW Funded Debt Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $122.7mn and expected recovery is 84.4%. Each Holder shall receive its Pro Rata Share of the RoG Equitization Recovery. On the Plan Effective Date, the Applicable Share Collateral securing the KfW Funded Debt Claims shall be contributed to NAC 29. The aggregate amount of claims is $122.7mn and expected recovery is 84.4%
• Class E2 (“General Unsecured Claims Against the KfW Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan.

Claims Against DB Nightjar Debtors

• Class F1 (“DB Nightjar Funded Debt Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $187.3mn and expected recovery is 84.2%. Each Holder shall receive its Pro Rata share of the RoG Equitization Recovery. On the Plan Effective Date, the Applicable Share Collateral securing the DB Nightjar Funded Debt Claims shall be contributed to NAC 29. 
• Class F2 (“General Unsecured Claims Against the DB Nightjar Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $21,921.48 and expected recovery is 100%.

Claims Against SMBC Debtor

• Class G1 (“SMBC Funded Debt Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $13.0mn and expected recovery is 100%. Each Holder shall receive its Pro Rata share of RoG New NAC 29 Debt equal to the full amount of its Allowed SMBC Funded Debt Claim. On the Plan Effective Date, the Applicable Share Collateral securing the SMBC Funded Debt Claims shall be contributed to NAC 29. 
• Class G2 (“General Unsecured Claims Against the SMBC Debtor”) is unimpaired, deemed to accept and not entitled to vote on the Plan.

Claims Against Investec NAC 27 Debtor

• Class H1 (“Investec NAC 27 Funded Debt Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $87.1mn and expected recovery is 98.9%. Each Holder shall receive: (i) its Pro Rata share of Investec NAC 27 Amended & Restated Loans; and (ii) its rights with respect to the Settlement Amount (if any) in accordance with Article IV.Y of the Plan and the Moelis/Weil/NRF Amending Creditors Term Sheet.
• Class H2 (“General Unsecured Claims Against the Investec NAC 27 Debtor”) is unimpaired, deemed to accept and not entitled to vote on the Plan.

Claims Against EDC Debtors

• Class I1 (“EDC Funded Debt Claims CRJ”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $132.2mn and expected recovery is 95.1%. The NAC CRJ Aircraft shall be transferred pursuant to the NAC CRJ Backstop Transfer, in accordance with the EDC Facilities Term Sheet and Article IV.D.16 of the Plan.
• Class I2 (“EDC Remaining Facilities Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $194.0mn and expected recovery is 86.4%. Each Holder shall receive its Pro Rata share of the Amended & Restated EDC Debt.
• Class I3 (“General Unsecured Claims Against the EDC Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan.

Claims Against ECA Debtors

• Class J1 (“ECA Financing Claims (Garuda)”) is impaired, deemed to accept and entitled to vote on the Plan. The aggregate amount of claims is $105.4mn and expected recovery is 65.7%. Treatment: To the extent that there are any ECA Financing Claims (Garuda) outstanding as of the Plan Effective Date, (i) The Holders of Allowed ECA Financing Claims (Garuda) shall receive the collateral securing such Claims (Garuda) in accordance with the rights and priorities set forth in the applicable ECA Exiting Financing Arrangement and Article IV.D.15 of the Plan and in accordance with the ECA Facilities Term Sheet.
• Class J2 (“General Unsecured Claims Against the ECA Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan

NB: There is a class deleted here (the old J2 ("ECA Financing Claims (Non-Garuda)) following the settlement with the ECA Lenders.

Claims Against Other NAC Debtors

• Class K1 (“General Unsecured Claims against the Other NAC Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $613,143.53 and expected recovery is 100%.

Claims Against All Moelis/Weil/NRF Exiting Debtors

• Class L1 (“Other Secured Claims Against the Moelis/Weil/NRF Exiting Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class L2 (“Other Priority Claims Against a Moelis/Weil/NRF Exiting Debtor”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class L3 (“Section 510(b) Claims Against the Moelis/Weil/NRF Exiting Debtors”) is impaired, deemed to reject and not entitled to vote on the Plan.

Claims Against / Interests in DB JOLCO Debtors

• Class M1 (“A Termination Claims Against the DB JOLCO Debtors”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $120.6mn and expected recovery is 81.1%FN. Treatment: All A Termination Claims against the DB JOLCO Debtors shall be extinguished (subject to Article IV.M herein and  without prejudice to any ongoing obligations of any DB JOLCO Debtor, any DB JOLCO Lessor, or any Reorganized DB JOLCO under the Moelis/Weil/NRF Exiting Creditors Term Sheet, any Interim Bailment Agreement(s), the Moelis/Weil/NRF Exit Documents, and any DB JOLCO Cooperation Agreement(s)), and: (i) each DB JOLCO Lender, on account of its Allowed A Termination Claim against a DB JOLCO Debtor, shall receive its Pro Rata share of the Lock-Box Payment (if any) to be paid in accordance with Article IV.W of the Plan and the Moelis/Weil/NRF Exiting Creditors Term Sheet; and (ii) 100 percent of the New DB JOLCO Equity, and the Reorganized DB JOLCO Equity shall be issued or transferred (as applicable) to the DB JOLCO Buyer in accordance with Article IV.D.1 of the Plan, the DB JOLCO Lender Exit Term Sheet, the Settlement and Transfer Agreement, and the Moelis/Weil/NRF Exit Documents, which, if the DB JOLCO Buyer is a DB JOLCO Orphan Buyer, shall be received on account of Allowed A Termination Claims against such DB JOLCO Debtor. FN: The projected recovery percentage is purely illustrative and has been estimated using the June 2021 Ascend MAMV of the aircraft, and the recovery remains subject to the results of the ongoing remarketing process.

FN: The projected recovery percentage is purely illustrative and has been estimated using the June 2021 Ascend MAMV of the aircraft, and the recovery remains subject to the results of the ongoing remarketing process.

• Class M2 (“B Termination Claims Against the DB JOLCO Debtors”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $68.8mn and expected recovery is 0%. Treatment: All B Termination Claims shall be extinguished and all rights of Holders of Allowed B Termination Claims in any collateral that is the subject of security granted by any DB JOLCO Debtor in relation to the B Termination Claims (but without prejudice to the continuing rights of the DB JOLCO Lenders in respect of such collateral) shall be relinquished and each Holder of an Allowed B Termination Claim shall receive its Pro Rata share of the Liquidation Recovery.
• Class M3 (“General Unsecured Claims Against the DB JOLCO Debtors”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $4648.65mn and expected recovery is 100%. Holder shall receive its Pro Rata share of the Liquidation Recovery.
• Class M4 (“Intercompany Claims Against the DB JOLCO Debtors”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan.
• Class M5 (“Interests in the DB JOLCO Debtors”) is impaired, deemed to reject and not entitled to vote on the Plan.

Claims Against/Interests in MUFG JOLCO Debtors

• Class N1 (“A Termination Claims Against the MUFG JOLCO Debtors”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $68.3mn and expected recovery is 93.2%.FN Treatment: All A Termination Claims against the MUFG JOLCO Debtors shall be extinguished (subject to Article IV.M herein and  without prejudice to ongoing obligations of any MUFG JOLCO Debtor, any MUFG JOLCO Lessor, or any Reorganized MUFG JOLCO debtor under the Moelis/Weil/NRF Exiting Creditors Term Sheet any Interim Bailment Agreement(s) and, the Moelis/Weil/NRF Exit Documents, and any MUFG JOLCO Cooperation Agreement(s)), and: each MUFG JOLCO Lender (or its nominee), on account of its Allowed A Termination Claim against a MUFG JOLCO Debtor, shall receive: (i) its Pro Rata share of (a) the MUFG JOLCO New Profit Participating Notes issued by such Reorganized MUFG JOLCO Debtor; provided that at the election of the Majority MUFG JOLCO Lenders, the MUFG JOLCO New Profit Participating Notes shall be issued to the MUFG JOLCO Orphan Buyer; and (b) the Lock-Box Payment (if any) to be paid in accordance with Article IV.W herein, the Moelis/Weil/NRF Exiting Creditors Term Sheet, and the MUFG JOLCO Lender Exit Term Sheet (ii) 100 percent of the Reorganized MUFG JOLCO Equity shall be transferred to the MUFG JOLCO Buyer in accordance with Article IV.D.1 herein, the MUFG JOLCO Lender Exit Term Sheet, the Settlement and Transfer Agreement, and the Moelis/Weil/NRF Exit Documents;, which, if the MUFG JOLCO Buyer is an MUFG JOLCO Orphan Buyer, shall be received on account of Allowed A Termination Claims against such MUFG JOLCO Debtor. FN: The projected recovery percentage is purely illustrative and has been estimated using the June 2021 Ascend MAMV of the aircraft, and the recovery remains subject to the results of the ongoing remarketing process.

FN: The projected recovery percentage is purely illustrative and has been estimated using the June 2021 Ascend MAMV of the aircraft, and the recovery remains subject to the results of the ongoing remarketing process.

•  Class N2 (“B Termination Claims Against the MUFG JOLCO Debtors”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $41.9mn and expected recovery is 0%. Treatment: All B Termination Claims against the MUFG JOLCO Debtors shall be extinguished and all rights of Holders of Allowed B Termination Claims against the MUFG JOLCO Debtors in any collateral that is the subject of security granted by any JOLCO Debtor in relation to the B Termination Claims against the MUFG JOLCO Debtors (but without prejudice to the continuing rights of the MUFG JOLCO Lenders in respect of such collateral) shall be relinquished and each Holder of an Allowed B Termination Claim against the MUFG JOLCO Debtors shall receive its Pro Rata share of the Liquidation Recovery.
• Class N3 (“General Unsecured Claims Against the MUFG JOLCO Debtors”) is impaired and entitled to vote on the Plan. Holder shall receive its Pro Rata share of the Liquidation Recovery.
• Class N4 (“Intercompany Claims Against the MUFG JOLCO Debtors”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote.
• Class N5 (“Interests in the MUFG JOLCO Debtors”) is impaired, deemed to reject and not entitled to vote on the Plan.

Claims Against / Interests in Investec NAC 8 Debtors

• Class O1 (“Investec NAC 8 Senior Funded Debt Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $192.5mn and expected recovery is 96.7%. Holder shall receive its Pro Rata share of the (i) Investec NAC 8 Amended & Restated Senior Loans; (ii) the Investec NAC 8 New Senior Profit Participating Notes; (iii) (together with the Holders of Allowed Investec NAC 8 Junior Funded Debt Claims) the Investec NAC 8 New Junior Profit Participating Notes; (iv) (together with the Holders of Allowed Investec NAC 8 Junior Funded Debt Claims) the Investec NAC 8 Exit Facility Participation Rights; (v) the Lock-Box Payment (if any) to be paid in accordance with Article IV.W herein, the Moelis/Weil/NRF Exiting Creditors Term Sheet and the NAC 8 Lender Exit Term Sheet; and (vi) 100 percent of the New Investec NAC 8 Equity shall be issued or transferred to the Investec NAC 8 Buyer in accordance with the NAC 8 Lender Exit Term Sheet, the Settlement and Transfer Agreement, and the Moelis/Weil/NRF Exit Documents;, which shall be received on account of the Investec NAC 8 Sernior Funded Debt Claims.
• Class O2 (“Investec NAC 8 Junior Funded Debt Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $29.8mn and expected recovery is 96.3%. Holder shall receive: (i) its Pro Rata share of the Investec NAC 8 Amended & Restated Junior Loans; (ii) (together with Holders of Allowed Investec NAC 8 Senior Funded Debt Claims) the Investec NAC 8 New Junior Profit Participating Notes; and (iii) (together with Holders of Allowed Investec NAC 8 Senior Funded Debt Claims) the Investec NAC 8 Exit Facility Participation Rights.
• Class O3 (“General Unsecured Claims Against the Investec NAC 8 Debtors”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is N/A and expected recovery is $0. Holder shall receive its Pro Rata share of the NAC 8 General Unsecured Claims Recovery Pool.
• Class O4 (“Intercompany Claims against the Investec NAC 8 Debtors”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote.
• Class O5 (“Interests in the Investec NAC 8 Debtors”) is impaired, deemed to reject and not entitled to vote on the Plan.

Claims Against / Interests in NAC 33/34 Debtors

• Class P1 (“Other Secured Claims Against the NAC 33/34 Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class P2 (“Other Priority Claims Against the NAC 33/34 Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class P3 (“NAC 33/34 Loan Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $543.2mn and expected recovery is 98.9%. Each Holder of an Allowed NAC 33/34 Loan Claim shall receive: (i) the New Money Investment Transaction LCF Rights; (ii) its Pro Rata share of the NAC 33/34 Take-Back Debt; and (iii) its Pro Rata share of 10% of New NAC 33/34 HoldCo Interests.
• Class P4 (“General Unsecured Claims Against the NAC 33/34 Debtors”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $7,964.02 and expected recovery is 100%. Each Holder of an Allowed General Unsecured Claim against any of the NAC 33/34 Debtors (which, for the avoidance of doubt, shall not include any claims in respect of liabilities owing to any Debtor) shall receive Cash in an amount equal to its Pro Rata share of the NAC 33/34 General Unsecured Recovery Cash Pool Amount.
• Class P5 (“Intercompany Claims Against the NAC 33/34 Debtors (Other than Intercompany Claims between the NAC 33/34 Debtors”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class P6 (“Intercompany Claims Between NAC 33/34 Debtors”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan.
• Class P7 (“Section 510(b) Claims against the NAC33/34 Debtors”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class P8 (“NAC 33/34 Intercompany Interests”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan.
• Class P9 (“Interests in NAC 33/34”) is impaired, deemed to reject and not entitled to vote on the Plan.

Proposed Key Dates

• Deadline to File Plan Supplement: April 5, 2022
• Voting Deadline: April 12, 2022
• Deadline to Object to Plan Confirmation: April 12, 2022
• Confirmation Hearing: April 19, 2022

Key Documents

The Disclosure Statement attached the following documents:

• Exhibit A: Plan of Reorganization
• Exhibit B: Restructuring Support Agreement
• Exhibit C: Corporate Organization Chart
• Exhibit D: Disclosure Statement Order
• Exhibit E: Rights Offering Procedures 
• Exhibit F: Liquidation Analysis (see Docket No. 312)
• Exhibit G: Financial Projections 
• Exhibit H: Valuation Analysis

Prepetition Indebtedness/Debt Silos

As of the Petition date, the Debtors had approximately $6.4bn in outstanding claims against NAC DAC and $5.9bn in total funded debt obligations, approximately $5.4bn of which are secured obligations. NAC’s prepetition funded debt is comprised of loans under thirty-nine financing facilities provided by eighty-three lenders. Currently, NAC DAC’s ultimate equity holders are: EQT’s Turbo Holding Guernsey Limited (39.94%); GIC’s Raffles Private Holdings Limited (34.05%); and
Axiom Partners 10 Ltd (26.02%). The Debtors’ primary prepetition outstanding claims are summarized in the table below:

For each of the prepetition financing arrangements, the borrower, its direct and indirect subsidiaries, and any other security grantor under that arrangement form a security group (or “silo”). To the extent that a Debtor is a borrower (or issuer) under multiple prepetition financing arrangements and its obligations thereunder are secured by the same collateral, that borrower, its direct and indirect subsidiaries, and any other security gran tor under those financing arrangements together constitute a single silo, as in the case of, for example, the prepetition financing arrangements under which NAC 29 is a borrower or issuer of notes. The following is a graphic and summary description of some of NAC’s primary silos of debt. 

The Disclosure Statement continues as to the silos:

• NAC DAC. In 2018, NAC DAC entered into a long-term $470 million financing facility with the largest commercial pension fund in Denmark, PFA Pension, Forsikringsaktieselskab (the ‘PFA Facility’). NAC DAC is the primary Service Entity for the Debtors, but does not own any aircraft. The PFA Facility
  is unsecured. As of the Petition Date, NAC DAC owes approximately $524.2 million on account of the PFA Facility, accounting for approximately eight percen t of the total claims outstanding against the Debtors. NAC DAC guarantees each facility to which a Debtor is a party.
• NAC 29 Silo. NAC 29 and its subsidiaries, which are incorporated in Ireland, Malta, Cyprus, or the United Kingdom, include a group of AOEs that own 234 aircraft financed by approximately $3.6 billion in outstanding obligations (‘NAC 29 Debt’), accounting for approximately fifty-seven percent of the outstanding claims against NAC DAC as of December 6, 2021. As part of the Scheme (discussed in further detail below), NAC 29’s unsecured lenders were pr ovided with a security package including security interests in NAC 29’s aircraft and $315 million in restricted cash (of which approximately $300 million remains). NAC 29 Debt is comprised of four separate issuances of U.S. private placement notes, a revolving credit facility, four Schuldschein loans, one term loan facility arranged by the Korea Development Bank, and two term-loan facilities arranged by the Development Bank of Japan.
• NAC A/S. NAC A/S is a Service Entity incorporated in Denmark that is the parent entity of sixty Debtor entities that collectively own 194 aircraft fi nanced by approximately $1.6 billion in outstanding obligations, accounting for approximately twenty-five percent of the outstanding claims against NAC DAC as of December 6, 2021. NAC A/S’s subsidiaries are borrowers under most of NAC’s debt facilities, including Direct Secured Facilities, Finance Lease Facilities, and ECA Financing Arrangements.
• NAC A/S Direct Subsidiaries. NAC A/S is the parent entity of thirty direct Debtor subsidiaries that are incorporated in Denmark, Singapore, Cyprus, the United Kingdom, France, or Ireland and seven indirect Debtor subsidiaries that are incorporated in the United States. NAC A/S and its direct Debtor subsidiaries own or lease 143 aircraft financed by approximately $1.1 billion in outstanding obligations, accounting for approximately eighteen percent of the outstanding claims against NAC DAC as of December 6, 2021. These obligations are financed with several different debt structures, including Direct Secured Facilities, Finance Lease Facilities, and ECA Financing Arrangements. Several of the facilities for which NAC A/S’s direct subsidiaries are borrowers are cross-collateralized with facilities under which NAC Pte. Ltd.’s subsidiaries are borrowers.
• NAC Pte. Ltd. Nordic Aviation Capital Pte. Ltd. (‘NAC Pte. Ltd.’) is a direct Debtor subsidiary Service Entity of NAC A/S and is the direct parent of twenty-three entities, including eight of the JOLCO Entities. 17 NAC Pte. Ltd.’s subsidiaries are incorporated in Singapore and collec tively own or lease fifty aircraft financed by approximately $422 million in outstanding obligations, accounting for approximately seven percent of the outstanding claims against NAC DAC as of December 6, 2021. NAC Pte. Ltd. and its subsidiaries are borrowers under several debt fac ilities, including NAC 2 A/S 2013 Facilities, NAC 2 A/S 2014 Facilities, ECA Financing Arrangements, and JOLCO Facilities. Several of the facilities for which NAC Pte. Ltd.’s subsidiaries are borrowers are cross-collateralized with facilities under which NAC A/S’s direct subsidiaries are borrowers.
• NAC 33/34. NAC 33/34 are AOEs incorporated in Ireland and collectively, have nine direct or indirect subsidiaries. NAC 33/34 and their subsidiaries collectively own thirty-sev en aircraft financed by approximately $543.2 million in outstanding obligations accounting for approximately nine percent of the outstanding claims against NAC DAC as of December 6, 2021.These subsidiaries are incorporated in Ireland, Sweden, or the British Virgin Islands. NAC 33/34 are borrowers under senior secured term loan  facilities arranged by BNP Paribas (‘BNPP’).

Events Leading to the Chapter 11 Filing

In a declaration in support of the Chapter 11 filing (the “Bickle Declaration”), Justin Bickle, the Debtors’ chief executive officer, detailed the events leading to Nordic Aviation’s Chapter 11 filing. The Bickle Declaration provides: “COVID-19 and the resultant shelter-in-place orders to stop its spread halted consumer and business travel overnight. Struggling airlines were forced to ground entire fleets and furlough or lay off thousands of employees….

COVID-19’s effect on the business led to a net loss of $639 million over NAC’s 2019-2020 fiscal year and a net loss of $2.4 billion over NAC’s 2020-2021 fiscal year. NAC’s customers are facing severe liquidity issues, and, simply put, NAC cannot collect cash that its customers do not have. To date, NAC has restructured the lease obligations of thirteen customers on ninety-five aircraft leases. NAC is currently involved in negotiations with fourteen additional customers to restructure the obligations on another 105 leases.

Further, since the last fiscal year, the book value of NAC’s fleet decreased from almost $7 billion to $4.8 billion—more than a thirty percent decrease in value. Significantly, aircraft values are a key factor in rent calculations between NAC and its customers and, despite management’s best efforts, this decrease resulted in lower rental income for new leases. Additionally, this decrease caused the loan-to-value ratio of NAC’s aircraft to rise rapidly and equity value in NAC to decrease significantly.

With an ever-increasing vaccination rate and government-imposed capacity restrictions slowly lifting, the last few months have shown promising signs of recovery, albeit with recent uncertainties caused by the Omicron variant. Airline CEOs are optimistic that there will be a recovery of business travel sparked by pent-up demand after not being able to visit customers although the exact timing remains opaque. In the summer months of 2021, NAC experienced a strong pick-up in placement activity, including delivering fourteen aircraft across all regions, improving on 2019 figures by over fifty percent. Additionally, in fiscal year 2020-2021, NAC’s lease extensions increased forty-five percent. Still, demand for air travel remains unpredictable as countries grapple with the highly contagious Omicron and Delta variants and continuously reevaluate their health and safety protocols….

Post-Scheme Engagement With Creditors

Following the implementation of the Scheme, NAC continued to actively report to its lenders. On March 29, 2021, with the Cash Sweep due to occur on May 17, 2021, NAC, through its advisors, approached lenders (most of whom were still organized from the Scheme negotiations) to request a forbearance of any remedies relating to a failure to make the Cash Sweep.

Concurrently with the forbearance discussions, NAC initiated discussions with the lenders to work toward a comprehensive resolution to its capital structure. To facilitate such discussions, lenders were granted access to management and the Board to discuss the business plan and responses to the current business environment. To date, NAC has responded to more than 519 diligence requests.

On May 16, 2021, NAC and its creditors executed the Forbearance Agreement. The Forbearance Agreement created a stable platform for NAC to continue engaging with stakeholders to reach a global resolution. Under the terms of the Forbearance Agreement, all principal amortization, maturity payments and Cash Sweep payments were deferred until July 31, 2021, preserving NAC’s liquidity. The Forbearance Agreement included three milestones to provide a clear timeline to ensure that the parties timely made sufficient progress, the first of which was the June 15, 2021 deadline to have a commercial term sheet agreed by two-thirds of NAC’s creditors (the 'Initial Milestone').

Despite active engagement with its creditor groups, NAC was unable to meet the Initial Milestone. As a result, beginning on June 15, 2021, NAC’s major creditor groups had the right to terminate the Forbearance Agreement. Ultimately, in August 2021, Norddeutsche Landesbank Girozentrale ('Nord LB') exercised its right to terminate the Forbearance Agreement with respect to itself and exercised its share charge over the shares in NAC Aviation 9 Limited, which owned five planes. Following the share enforcement, an Irish liquidator was appointed, and NAC Aviation 9 Limited is in the process of being liquidated. The Forbearance Agreement remained in place through December 17, 2021.

During the forbearance period, NAC and its advisors made substantial progress on the terms of a comprehensive and consensual restructuring transaction, as memorialized in the RSA.”

Prepetition Indebtedness

As of the Petition Date, the Debtors have approximately $6.3 billion in outstanding Total Claims and $5.9 billion in total funded debt obligations, approximately $5.4 billion of which are secured obligations. NAC’s prepetition funded debt is comprised of loans under thirty-nine financing facilities provided by eighty-three lenders. Currently, NAC DAC’s ultimate equity holders are: EQT’s Turbo Holding Guernsey Limited (39.94%); GIC’s Raffles Private Holdings Limited (34.05%); and Axiom Partners 10 Ltd (26.02%).

About the Debtors

According to the Debtors: “NAC provides leasing and lease management services to airlines and aircraft investors worldwide. For 30 years NAC's team of industry experts have been providing flexible, customized and competitive aviation solutions to airlines globally. We are very passionate about regional aviation. Our commitment, agility and expertise in delivering the right aircraft for our customers’ needs has enabled us to grow and maintain our position at the heart of regional aviation.”

Corporate Structure Chart (see Docket No. 6, page 287)

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